Options Active as MetroPCS Merges with T-Mobile USA (PCS)

Some big news is hitting the telecom space today, as Deutsche Telekom’s supervisory board has decided to merge MetroPCS (PCS) with T-Mobile USA. The recapitalization will involve PCS distributing a $4.09 per share cash payment to stockholders, while reverse splitting 1-for-2.

John Legere, President and Chief Executive Officer of T-Mobile, said: "The combination with MetroPCS is another logical and significant step that will accelerate our Challenger Strategy and enable us to deliver amazing, affordable and trusted 4G services, while providing opportunities to expand geographic territories and serve more customers.”

The stock is under pressure following the news, currently off by 5.86%, trading at $12.77. Given the stock’s monster run over the past three months, I doubt anyone is complaining, though.

Options are active on the name today, with a plethora of strikes and directions in play. The heaviest action is found on the October $13.00 put, where over 13,000 contracts have traded on open interest of 14,929. The largest block was 6,500 contracts, sold on the bid for $0.35; this looks closing.

The November $13 call is next on the most active list with over 7,000 contracts traded on open interest of 1,587. The action here has been premium selling as well in medium to large blocks: 1,543 sold for $0.85-0.90, 943 sold for $0.80, 458 sold for $0.60, and 498 sold for $0.55.

Finally, rounding out the trade volume with some fresh, long premium, the November $12 put was purchased 1,000 times, on the offer, for $0.40. Open interest on the strike was only 476 contracts, indicating new positioning 

MetroPCS Communications, Inc. is a facilities-based wireless broadband mobile communications provider in the United States, including the Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco, and Tampa/Sarasota metropolitan areas.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.