MetroPCS (PCS) is flat at $10.04 and one player sells 30,000 Nov 10 puts on the stock at 15 cents to buy 30,000 Feb 9/10 put spreads for 50 cents. Open interest in Nov 10 puts on PCS is 62.3K and the third largest in the name and the Feb spread appears to be a new position. If so, the activity probably rolls positions opened last month, shortly after Deutsche Telecom announced plans to merge its T-Mobile with MetroPCS. The deal, which involves a complicated stock swap, is expected to close in the second quarter 2013. Opening of the Feb downside 9 – 10 put spread might be a bet the stock will continue to trend lower despite the merger plans, or maybe that the deal will falter. PCS has already lost 29 percent since the deal was announced on 10/2.
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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.