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Bulls Won't Hang Up on Sprint Nextel

Stocks in this article: S

By David Russell, reporter at OptionMonster

NEW YORK -- The bulls cannot hang up the phone on Sprint Nextel (S). .

Last week the wireless carrier's shares pulled back after doubling since the spring. Option buyers jumped into the name early Wednesday, snapping up more than 2,800 Weekly 5 calls expiring at the end of this week, according to OptionMonster's tracking systems.

Calls lock in the price investors must pay to own a stock and can generate some nice leverage in the event of a rally, but they will end up worthless if the shares don't move. Wednesday they worked for the bulls.

The initial trades priced for 6 cents when Sprint's stock was down 1% at $4.84. The shares then started to climb and ended the session at $5.20, a gain of 6.12%. But that profit was nothing compared with gains in the calls, which more than quadrupled in value to 28 cents by the end of the session.

Volume in the calls kept growing to 12,543 contracts. Overall option volume in the company was triple normal amounts, with total calls in all strikes outnumbering puts by a bullish 2-to-1 ratio.

Russell has no positions in S.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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