$S calls prices triple overnight

Bullish option traders posted exponential gains in Sprint just 24 hours after opening their positions.

Just yesterday, Investitute’s tracking systems detected the purchase of 5,000 May $6.50 calls for $0.16 with shares at $5.96. This was clearly a new position, as volume was well above the strike’s open interest of 383 contracts.

Those calls sold for $0.50 right after the opening bell this morning, more than 3.5 times their original purchase price. The stock rose 11 percent at the same time, a huge move but still far below that of its options on a relative basis.

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.

S surged 8.33 percent to $6.50 today. The wireless phone carrier traded higher after reports of an impending final deal with T-Mobile.

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