Why bulls are piling into T-Mobile

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T-Mobile rallied hard last month, and now the bulls are back.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 5,000 February 35 calls for $0.70 and the sale of an equal number of February 40 calls for an average premium of $0.075. That translates into a cost of $0.625.

Known as a bullish call spread , the trade leverages a move between two price points--in this case $35 and $40. The position will expand to $5 if the top of that range is reached, a gain of 700 percent from the entry price. (See our Education section)

TMUS is up 1.44 percent to $32.96 and has risen 24 percent since it was recommended on the Dec. 3 edition of optionMONSTER's Market Action webinar. The wireless carrier is now filling a bearish gap from August 2007. Its all-time high earlier that year was $40.87, so today's option trade is looking for a return to those historic levels.

Total option volume is slightly above average in the name so far today, with calls outnumbering puts by more than 100 to 1.



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: TMUS

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