Mike Khouw's Sprint Nextel Corporation (S) Trade

On CNBC's Options Action, Mike Khouw suggested an options strategy in Sprint Nextel Corporation S. This stock closed sharply lower on Monday, on the news that AT&T Inc. T is buying T-Mobile USA. Mike Khouw said that he noticed some activity in April and May call options. The volume in Sprint's (S) May 5.50 call options was unusually high as 41,610 call options were traded. Mike Khouw thinks that people are making hedged bets in case the stock rebounds. He suggested that investors should buy the May 5 call options for $0.10. His break even for this trade is $5.10. Sprint Nextel Corporation (S) fell 13.61% on Monday, and closed at $4.36.