Call buyers dial up big win in $S

It took just two sessions for bullish option positions in Sprint to yield significant returns.

On Wednesday, Investitute’s proprietary programs cited the purchase of 15,000 February $5.50 calls for $0.17 as part of a bullish spread with shares at $5.21. Open interest in the strike was only 1,159 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $0.30 yesterday morning, nearly doubling their purchase price in 48 hours. The stock rose 4% at the same time, illustrating the type of leverage that can be obtained through options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

S jumped 5.1% to $5.36 yesterday. The wireless carrier surpassed quarterly expectations and raised its outlook yesterday morning.

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