Bull & Bear: Sprint Nextel Corp. (S)

Shares of Sprint Nextel Corp. S have been on a wild ride over the past few months; lets take a deeper look to see where share might be heading next… Bulls: Despite the recent sell off, shares are respecting the upward-trending 50-day moving average; over the past two weeks, shares have been consolidating above the level. The longer Sprint can hold the level, the greater the chance that shares attempt to jump pass $4.80 and fill the gap up to $5.00. Bulls will also note that during the recent decline, shares bounced hard off up the upward-trending 200-day moving average, which shows that bull support remain active at major levels. A bullish trader could consider buying the August $4.50/4.50 risk reversal for a net debit of $0.16. This effectively gets you long shares at these levels for a small initial cash layout that simply buying stock. The trade also allows you to sell up side calls to further enhance yield. Bears: Bears will note that the recent run up in Sprint shares was due to the possibility of a takeover by T-Mobile. Given that AT&T is acquiring T-Mobile, the likihood of Sprint finding a buyer is dramatically reduced, thus the downdraught in the stock. Bears will note that, should shares fail to hold the 50-day moving average, the 200-day would be tested soon after. This progression would create to possibility of a new long-term bear trend being established. A bearish trader could buy the August $4.50/4.00 put spread for a net debit of $0.20. This would be a cheap bet that shares test and break some historical trendlines. The max payout is $0.30 or +150%. Sprint Nextel Corporation is a holding company, with its operations primarily conducted by its subsidiaries. Sprint is a communications company offering a range of wireless and wireline communications products and services for individual consumers, businesses, government subscribers and resellers. The company operates in two business segments: Wireless and Wireline. Sprint offers wireless and wireline voice and data transmission services to subscribers in all 50 states, Puerto Rico and the United State's Virgin Islands.