Vol. Seller in Sprint

• Posted by Adam Warner
• on November 11th, 2009

Some action in Sprint yesterday, via Cuttone and Company.

Sprint Nextel (S) was the scene of a large strangle sale as a trader is betting that the stock will be range bound through January expiration. They sold the January 3 puts along with the 4 calls 30,000x and collected .42 cents. The trade will be profitable as long as Sprint is above $ 2.58 and below $4.42 on January expiration.

Well, other than the big move the other day, it’s a pretty dormant name for something with this low a price tag. 10 Day HV has gone as low as 40 on multiple occasions the past half year. I have trouble mentally adjusting to options on single digit stocks, so let’s say we mentally split it 1:10. Does a sale of the 30-40 strangle in Jan. for $3.80 seem like a good price with the stock at $32.50? Seems OK, not spectacular, though if this was in fact a $32 name, the HV would be lower.

 

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