Leap Wireless has been a laggard in the prepaid cell phone
space, and now one investor is looking for a turnaround.
optionMONSTER's Heat Seeker tracking system detected the purchase
of 3,000 October 17 calls for $1.93 and the sale of equal-sized
lots in the October 14 puts for $1.03 and the October 21 calls for
$0.60. It resulted in a net debit of $0.30 and pushed total options
volume in the name to five times greater than average.
LEAP fell 2.27 percent to $16.33 on Friday and is down 11 percent
in the last month. In contrast, rivals Sprint Nextel and MetroPCS
Communication are up 21 percent and 18 percent respectively over
the same period.
They both reported strong results results in the month, while
LEAP missed its numbers amid increased competition. PCS has also
received bullish options trades recently.
It now appears one investor thinks LEAP will climb as the year
progresses, and used premium from selling out-of-the-money calls
and puts to finance a long position in the October 17 calls. The
trade will earn more than 1,200 percent if the stock closes at or
above $21 on expiration and lose money if it falls below $14.
I own PCS.
(Chart courtesy of tradeMONSTER)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.