) has been keeping a low profile following its early July spin-off
the merger of Sprint Nextel Corporation and
. Despite the lack of notable headlines, the stock has been making
its way quietly up the charts, tacking on more than 18% from its
July 8 opening of $5.65.
Unlike sector peer
), option traders from both sides of the fence have been taking
note of this positive price action, and have been bullishly
aligning themselves toward S in recent weeks.
Jumping right in... At the International Securities Exchange (ISE),
Chicago Board Options Exchange (
), and NASDAQ OMX PHLX (PHLX), speculators have bought to open
8,408 calls during the past 10 sessions, compared to 1,125 puts,
resulting in a call/put volume ratio of 7.47. This is a marked rise
from the Aug. 1 reading of 2.05.
This call-skewed trend is echoed in the stock's gamma-weighted
Schaeffer's put/call open interest ratio (SOIR) of 0.49, which
shows that near-the-money call open interest more than doubles put
open interest among options expiring in the next three months. In
the front-month series, this has translated into
heavy accumulations of call open interest
at the September 6 and 7 strikes, where a respective 35,370 and
22,747 contracts currently reside.
Meanwhile, put players have also been taking a neutral-to-bullish
stance on S in recent weeks. Throughout the last 20 sessions,
traders at the ISE, CBOE, and PHLX, have sold to open 7.38 times as
many puts as they've bought to open. Digging deeper into the data
shows that a number of short positions have been initiated at the
September 6 strike -- home to peak put open interest in the
front-month series. Based on S' current perch at $6.91, these
expect the $6 mark to hold as support through the close on Sept.
Outside of the options pits, sentiment is a little less optimistic.
For starters, short interest soared 46.7% during the latest
reporting period. Additionally, roughly 78% of covering analysts
maintain a "hold" or worse suggestion toward the stock, and the
consensus 12-month price target of $6.76 stands at a discount to
present trading levels.
This article by Karee Venema was originally published on
Schaeffer's Investment Research
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