J.P. Morgan Suggests Selling Calls on Leap Wireless

J.P. Morgan is out with a research note this morning, where it suggests that traders look to overwrite their holding in Leap Wireless International LEAP. The J.P. Morgan Equity Analyst, Philip Cusick, published a fundamental report on Leap Wireless on Friday, which stated: “We are downgrading Leap Wireless to Neutral from Overweight. Our price target remains the same, at $16 per share, based upon our DCF analysis. We believe the last 2 weeks have begun the typical prepaid summer slowdown, which could be exacerbated this year by high gas prices around the country.” J.P. Morgan suggests that investors who agree with the J.P. Morgan Equity Analyst should consider selling the July-2011 $17.5 calls on top of their long stock exposure for a net premium of $0.51. The total call-away return is ~12.6%. Leap Wireless International, Inc. is a wireless communications carrier that offers digital wireless services in the United States under the Cricket brand. Leap's Cricket service offerings provide customers with unlimited wireless services for a flat rate without requiring a fixed-term contract or a credit check.