Sprint to Rally?

Communications service provider, Sprint Nextel Corp (NYSE: S), is rounding up some bulls this afternoon. The stock has been on a slide as of late down from $4.23 to its current $3.38 in three weeks. One trader is betting that that trend will not continue though and is buying calls.

The Sprint Nextel Feb $4 calls were purchased in a block of 9,995 on the offer this morning; total volume on that strike is totaling over 20,000. The open interest of the line is over 90,000, but the indication is the same—that sprint could be done going down and has a good probability of a rebound.

Technically the stock is pushing down against the lower Bollinger Band after an up tick in volatility; this generally means that the stock is due for, at least, a move sideways if not higher. I like buying the shares here for 3.38 and selling the Feb $3.50 call against the position for $0.17.