Sprint Nextel may get acquired, and option traders think that's
good news for Clearwire.
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.
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
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.