OptionsHouse

Options Trading News

June 28, 2013  Fri 5:16 AM CT

TMUS: SEE CHART GET CHAIN FIND STRATEGIES
The bulls loved T-Mobile earlier in the month, and they're looking for the gains to keep on coming.

Traders snapped up the August 24 calls for $1.05 on June 14. Yesterday they sold those contracts for $1.52 and rolled up to the August 26s for $0.86, with about 11,000 contracts traded at each strike, according to optionMONSTER's Heat Seeker tracking system.

Long calls lock in the price where the stock can be purchased no matter how far it might rise. They give investors cheap exposure to gains in the shares and can generate some nice leverage in a rally. (See our Education section)

TMUS has been running like a horse since March and rose another 3.85 percent yesterday to close at  $24.55. The call roll allowed the trader to take some money off the table while staying in the game for more upside.

Total option volume was 5 times greater than average. Almost 33,000 calls traded in the name versus barely 700 puts, a reflection of the session's bullish sentiment.
 
Disclosure: I own TMUS calls.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »