NEW BULLISH Plays
Dish Network - DISH - close: 40.22 change: +0.96
Stop Loss: 39.15
Current Gain/Loss: unopened
Entry on April -- at $--.--
Listed on April 25, 2013
Time Frame: exit prior to earnings in mid-May
Average Daily Volume = 4.0 million
New Positions: Yes, see below
Why We Like It:
There is a soap opera drama happening in the telecom world right now.
Sprint Nextel (S) is currently trying to buy Clearwire Corp. (CLWR) for $2.97 a share. Sprint already owned half of CLWR and now they're trying to buy the rest thanks to an influx of cash after selling $20 billion of their company to Japan's SoftBank Corp. At least that is the plan. The deal between Sprint and SoftBank hasn't closed yet. Meanwhile Crest Financial, a Texan investment firm, is arguing that CLWR should reject Sprint's offer because it undercuts the true value of the company. Now DISH recently stepped in with a $25.5 billion bid to buy 70% of Sprint. It's a deal worth $7.00 a Sprint share and each Sprint shareholder would receive about 0.059 shares of DISH per share of Sprint they own. Naturally SoftBank is arguing their $20 billion deal is better suited for Sprint and there would be less regulatory hurldes. Now analysts are starting to chime in and some are suggesting that DISH may have to sweeten its deal if it wants to succeed.
Normally you would think that shares of DISH might go down if the company is facing a potential bidding war over Sprint. Yet the stock is in rally mode. There was some volatility when the news hit of its original offer on April 15th. Since then DISH has broken out to new multi-year highs. Traders just bought the dip today.
We do think the rally continues but there is probably higher-than-average risk here. Wall Street might recoil if DISH does raise their offer too much.
The April 23rd high was $40.34. I am suggesting a trigger to launch small bullish positions at $40.50. If triggered our target is $44.50 but we will plan on exiting positions prior to earnings in mid-May (no date set).
Remember, small positions! Shares of DISH might be volatile with the Sprint/Clearwire/SoftBank drama going on.
Trigger @ $40.50 *Small Positions*
Suggested Position: buy DISH stock @ (trigger)
- (or for more adventurous traders, try this option) -
buy the Jun $41 call (DISH1322F41) current ask $2.05