Massive Call Spread Transacted on Sprint Nextel

S – Sprint Nextel Corp. – A massive call spread involving 200,000 option contracts was transacted on wireless communications company, Sprint Nextel Corp., during afternoon trading today. Sprint’s shares increased as much as 3.83% during the session to touch an intraday high of $4.61. Looking at the mammoth trade purely from an options perspective, it appears to be a bull call spread, with 100,000 calls picked up at the January 2011 $5.0 strike at a premium of $0.38 each, and 100,000 calls sold at the higher January 2011 $6.0 strike for premium of $0.12 apiece. But, it looks as though the spread was tied to the sale of 2.3 million shares of the underlying stock at a price of $4.5565 each. The number of sold shares matches up with the delta of approximately 0.23 on the spread, which suggests the transaction is a delta neutral hedge. Net premium paid to put on the call spread amounts to $0.26 per contract. Roughly 212,000 contracts changed hands on Sprint Nextel Corp. thus far in the trading session, which represents approximately 42.8% of total existing open interest on the stock of 494,824 contracts.