Bulls look beyond Sprint, buy Clearwire
David Russell | [email protected]
Our Heat Seeker monitoring system is detecting a surge of upside activity in the beaten-down broadband stock today, with more than 31,000 calls changing hands. Almost half of that volume focused on the November 2.50 contracts, which traded for $0.05 and $0.10.
Owning those long calls lock in a $2.50 purchase price on CLWR for the next five weeks. While that's far above its current $1.80 level, it could prove a good investment if the company is acquired at a significant multiple. (See our Education section)
That's the buzz in Sprint today after reports that the company is in advanced talks with Japan's Softbank. S owns 49 percent of CLWR. The smaller company also has plans to expand with the new LTE wireless networking protocol, where Softbank is already active outside the United States.
That's driving speculation in CLWR, which is still down more than 90 percent in the last five years despite today's gain. The stock is up 50 percent to $1.95 in afternoon trading.
S is also exploding higher on the potential takeover news today, resulting in a big payday for some traders. Earlier in the week, they bought the S November 5.50 calls for $0.20, and those same contracts traded for as $0.80 earlier today.
Overall option volume in CLWR is 30 times greater than average. It's through the roof in S, with almost 600,000 contracts changing hands--almost 13 times more than usual in that name.