Bull v. Bear: TMUS Near 3-Year Low, SPCX Spectrum Update Sparks Selloff

Welcome back to Fast Market right her on Schwab Network. We're watching shares of T mobile under some heavy pressuay, falling to the lowest level in almost three years. The lower comes after SpaceX reached an agreement to purchase great management nationwide 800MHz spectrum portfolio. Now, the deal would give SpaceX government issued lic granting the exclusive right to transmit wireless data over specow band radio frequencies across designated geographic areas. This is giving a boost to some of the towers, cells and hitting names like T-Mobile, Verizon and AT&T, which are also falling in reaction. Let's bring back my co-hosts, Tom White and Kevin Hanks, to take a look at some details on t deal. Kevin, let's get your thoughts on this deal. What it means for a name like T-Mobile. You know, Elonk is becoming one of the most disrupter. I mean, on steroids that we've known in our lifetime and addleo ding. And you can see it in the price of the stocks. It's not only we're talking about T-Mobile, but it's also Verizon, it's also AT&T. And you know, he it appears from what I've read that he's getting in this busin relatively easily because he's already done all the work. He's already gothe infrastructure. And so this is going to start a long t debate about, you know, what, what's the best way, what's the best phone carrier, what's the best internet? A Elon Musk is right there in the middle of it. I think that he's taken about $39 billion in market cap. Out of those three stocks today. And so just like we used to say with Amazon ifn's getting in your business you're in trouble. Well guess what. Elon Musk is doing a very similar thing. If you find if you wake upne morning and Elon Musk is in your business involved or getting into you're going to have a bad day. Nicole. I also think is really interesting how we've seen accelerated selling in the morning. It was six 7% for some of these names, and now we're seeing 9%, 12% drop. So the selling is becoming obviously more clear 12% for T-Mobile. Tom yourughts? Yeah. This has been a falling knife over the last year and a half. I m hit all time highs above you know we're down 45% from those levels from and t you know besides this news, sending the stock eve lower to nearly three year lows. stock's falling due to stalling revenue growth. De Celerat as far as subscriber ads rate rate plan friction leading to higher churn rising nontraditional competition. And this is another step in that. And thetion on T-Mobile typically a lot higher than its competitors. So not spris that we're seeing a pullback. But this just adds to losses that we've seen overhe last year and a half as Elon Musk and Starlink might get into their business. And you just wonder how many, you know, cribeo take from, you know, these big three that are already in their. So why don't we do some example trades? Let's dive in right now. Yeah. Nicole. Tom, you k this to give you a comparison, this stock has been beat up along way. Why? Because and Starlink. Much like there's fears in Uber that and this only fuels that speculation and things like that. But I don't think this is good news for these companies at all.ole and Tom. So what I looked at my paper money trade was somethingt the expected move. Now this has gotten lower since we put this trade in. I looked at the 148 put calendarg October 23rd selling October 16th originally trading about $0.73, trading about $1.15 right now. So it's already made about almost 50% on this trade. Since we looked at it, because the stock has continued to move towards that 148ike. Now maybe do you want to adjust your strikes a little lower because the move isut $6 or so. On the downside, Tom, this a calendar spread that's looking for a move towards 1 The you know, it's already making that move TAnd this is gained in value. But depending don't look at the strikes. Look at the strategy and pick out the strike where you think this stock could go Tom. But certainly a risk tond I said, that's already higher than when we looked at it about an hour ago. Yeah, yeah. Let's break this one down. October 23rdkly options that expire in 14 days. Kevin looked at this example tra buying the 148 strike put in that series, selling the October 16thy option seven days. That same 148 strike puts just a one week wide bearish put calendar here. As Kevin mentioned, we've got 73 cent debit. That's where it was trading earlier. Stocks pulled backr $2 from when we looked at it earlier. But it's just an example trade.KeepA is going to be a risk. So if you pay $73 $73 for downside exposure, if you pay where it's currently tradingver a dollar, that's going to be your risk on that. So take that into consideration. Kevin mentioned you want it to go at or near 148, which is a couple of bucks below the current share price, but you've probably got a range between maybe 1, 142 on the downside, maybe 155 on the upside to beentially profitable. So while you're shooting and aiming for that ste you choose on a calendar spread, there's still a range outside of that strike for the stock ory become profitable on that. You've got some risk over the next seven days also, but that's an inexpensive way to so. What you don't want to happen, you don't want the stock torse u don't want the stock to dump and fall below the 1411 40 level. That's when you start losing profitability down there. So keep that in mind. Kevin. I looked at something that price has on mine also because the stock has pulled back. Now the stock pays a 3.1% dividend yield. That's not guaranteed.ey continue to pay it, it's a pretty hefty yield. I was going to look at a covered call strategy, but let's look at a strategy that has thee risk profile. And if the stock continues to fall, you can buy the shares at a lower price point. I went to the October 23rd wy options. So that's expires in 14 But also it avoids earnings on the 28th. So you don't hav that event risk. I looked at selling the October 23rd weekly g roughly about a 240 credit on. r bucks right now. 420 about at this point. So maybe you adjust yoikes. But these are example trades. This is a neutral to bullish type strategy. If you collect that 240 credit that's what your potential pfita is. If you collect $4 you can make $400. So dependithecredit you cr profitability. Now you've got a lot of risk o one because there's a lot of risk down to zero. Because if the goes below the 150 strike, you may get assigned on those short that short and then you'd be buying the shares. But if you collected a 240 credit, it takes your break even down to 147 60. So you buy the share at a discount because you collect a credit on a cash secured put, you got about over $14,700 in risk on this one. Kevin, your thoughts on the cash secured? Put where you might want to adjust the strik Yeah. The expected move out till October 23rd is $9, right. If you want to use that to adjust your strikes or add to your strikes. But remember, if you sell this for 240, your entry is not going to be $150. It's going to be 147, is where you're going to enter. So you're still would be a profitable trade if the stock were to stay right here. Tom. So yeah, this is one that that you say at some point I want to be a buyer of T mobile below the market. So rather than doing a covered call and that dividend is something you have to be cognizant of even though it guaranteed. This is another way to enter the the T st and selling a call. Same the And if you do have to own the. shares, its capital intensive, then you start collecting that potential of that 3.1% dividend also. But you still have a slight cushion to the downside. Ait doesn't go below 150 and stays above there, you just get to keep the credit you collected. So there you go Diane. And neutral to bullish Nicole excuse me. Neutral to bullish short