Trade looks for more gains in Sprint

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Sprint Nextel is consolidating after a big move, and now investors are looking for further gains.

optionMONSTER's Heat Seeker tracking system detected heavy buying in the July 5 calls, which traded more than 39,000 times against open interest of 15,892. A single block that priced for $0.31 accounted for more than half of the activity.

S


S rose 0.44 percent yesterday to $4.61 and is up 20 percent in the past month, compared with a 5 percent decline for the S&P 500. The wireless carrier has been gaining ground recently as it does a better job retaining subscribers and as new prepaid plans gain traction with cash-strapped consumers.

The stock had spent 10 months trapped below $4.50 but ripped through that level last month and pushed as high as $5.31. It's been falling since then but seems to have found support at the same level that had previously served as resistance.

Some chart watchers may interpret the price action as consistent with an uptrend and consider the shares worth getting long on a pullback.

That's apparently what Wednesday's call buyers have in mind, and they need S to rally at least 15 percent to turn a profit.

The strength in prepaid wireless plans appears to be an emerging trend, and has also appeared in MetroPCS Communications ( PCS ).

Overall options volume in S was almost twice the average level yesterday, with calls outnumbering puts by a bullish 17 to 1.

DISCLOSURE: 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.


This article appears in: Investing , Options

Referenced Stocks: PCS , S

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