Options Trading News

August 9, 2012  Thu 3:16 AM CT

Sprint Nextel has been ripping higher, and the bulls aren't quitting yet.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 11,148 November 5 calls for $0.27 and the sale of roughly the same number of August 4 calls for $0.44. Volume was below open interest in the August options but not the November contracts, which indicates that an existing position was closed and rolled to the higher strike.

The transaction let the investor collect a credit of $0.17 and gave him or her an additional three months of upside exposure. (See our Education section for more on how options can be used to generate leverage and manage trades.)

S rose 6.50 percent to $4.59 yesterday and has almost doubled in the last three months. The wireless carrier's stock fell hard in 2011's market crash and has rebounded only since the spring. The last two earnings reports have beaten expectations, and the option activity has been bullish.

More than 84,000 contracts traded in the session, almost twice the daily average, according to the Heat Seeker. Calls outnumbered puts by about 4 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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