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Why trader is selling puts in Sprint

Chris McKhann (chris.mckhann@optionmonster.com)

The biggest trade of the day so far is put selling in Sprint.

More than 20,000 Sprint options have traded this morning, already 5 times its full-session average for the last month. optionMONSTER systems show that almost all of that action is in the November 6 puts, where a block of 14,705 sold for the bid price of $0.23. This is a new position, as its volume was above the strike's previous open interest of 11,437 contracts.

The put selling , which isn't tied to any trading in Sprint shares identified by our systems today, will profit if the stock holds above $6 through expiration in about five weeks. But the trader may actually be hoping for a pullback below that level to purchase shares at an effectively discounted price of $5.77, including the credit from the put sale. (See our Education section)

S is up 1.4 percent to $6.09. The wireless carrier has been holding support at $6 on a closing basis over the last week. Shares were up at $7.25 in early August.

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