Calls to $TMUS pay off again

Bullish option traders cashed in on T-Mobile for the second session in a row today.

On April 1, Investitute’s tracking systems detected the purchase of 5,000 June $80 calls for $0.64 to $0.67 with shares at $74. Open interest in the strike was only 321 contracts before that session began, showing that this was fresh buying.

Those calls sold for as much as $2.30 today, about 3.5 times their purchase prices. The stock rose 5.12% in the same time period, underscoring how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Investitute in as many sessions.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

TMUS reached a session high of $78.29 early this morning but ended the down off 1.46% at $77.15. The wireless carrier rallied yesterday after the chairman of the Federal Communications Communication indicated support for the company’s merger rival Sprint.

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