MetroPCS gets another upside bet
David Russell | email@example.com
optionMONSTER's Heat Seeker tracking program detected the purchase of 18,000 June 12 calls for $0.50 and the sale of an equal number of June 14 calls for $0.09. Volume exceeded open interest at each strike, indicating that new positions were initiated.
Known as a bullish call spread, the strategy is designed to leverage a rally in the pre-paid wireless company. It cost $0.41 to open and will expand to $2--a profit of 388 percent--if shares close at or above $14 on expiration. (See our Education section)
PCS rose 1.46 percent to $11.12 yesterday. The stock more than doubled between July and October before pulling back, and it has been regaining momentum this year. It has quietly appreciated 10 percent in the last month, and traders have been taking notice.
The call buying began in late March, with bullish spreads on the 27th and 28th. Chris McKhann also analyzed a complex bullish strategy in the May contracts earlier this week on his "Trading & Abetting" webcast.
Total option volume was triple the daily average yesterday, according to the Heat Seeker. Calls outnumbered puts by 7 to 1.