Clearwire (CLWR) is under pressure today and options on the communication equipment company are seeing brisk trading after Sprint signed a deal with LightSquared, which possibly puts in jeopardy Sprint’s partnership with Clearwire, which needs additional funding to build out its network. CLWR touched new 52-week low on the news and is down 52 cents to $2.25. Early options trades in Clearwire included a Dec 1 – 3 (2X1) put ratio spread at 70 cents, 6000X on ISE. It might roll a position down in strikes, and from the in-the-money $3 puts to out-of-the-money $1 puts. Separately, an investor sold 2500 Sep 3 puts at 86 cents each, which might be a closing trade. 14,000 calls and 34,000 puts traded in CLWR so far. Typical volume for mid-morning is about 1,100 contracts. Meanwhile, implied volatility in Clearwire has jumped another 24 percent and is elevated at 150. Earnings will come into play on the afternoon of Aug 3.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.