Option Trader Digging for Big T-Mobile Gains (TMUS)

T-Mobile 5G

T-Mobile stock (NASDAQ:TMUS) hasn’t seen that much upside over the past two years as the company awaits a final ruling on its proposed $26 billion merger with Sprint Corp. In fact, against the broader market, and stocks like Apple, Microsoft or Tesla, T-mobile represents significant underperformance. But that isn’t stopping a big trader in the options market from making a big bet on more TMUS upside ahead in the next several weeks.

At 11:26 a.m., (via Benzinga) the trader placed an unusually large trade buying 18,000 T-Mobile call options. The call contract, expiring on March 20, at the $85.00 strike price and a bid of $1.40 represents a bullish bet on TMUS shares worth more than $2.5 million.

Why is this trade important

There could be several reasons for the large call purchase on Tuesday, but there’s a good chance the trade was executed by a deep-pocketed individual or institutional traders who are professionals trading for entities like hedge/mutual funds, either of which could have some specific information about T-Mobile’s upcoming earnings report or a potential update on the company’s pending merger with Sprint.

T-Mobile’s 4Q/19 earnings

Investors will get T-Mobile’s fourth-quarter earnings results on Feb 6, after the closing bell. The Bellevue, WA-based company pre-announced the addition of 1.9 million total net customers in the quarter under review, bringing its total net customer base to 86 million.

Analysts expect T-Mobile to report $0.83 in eps, up $0.08/year-over-year basis. Revenue is expected to be $11.8 billion, up $400 million from the same quarter in 2018. In the last reported quarter, the company beat eps expectations by nearly 20%.

T-Mobile Price Action

T-Mobile shares were last trading up by 98 cents, or 1.19%, at $82.49. Prior to today’s trading, TMUS has gained 2.8% over the past six months.

Of the 29 analysts covering the stock, 7 rate it “strong buy”, 16 “buy” and 6 “hold”. No analyst rates T-Mobile at “sell”. Their average target price is $91.05.

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