The Wall Street Journal-20080130-Calls on Yahoo Skyrocket Ahead of Earnings Report

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Calls on Yahoo Skyrocket Ahead of Earnings Report

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Traders turned to Yahoo Inc. options as they expected an earnings report from the Internet giant to spark swings in the company's stock price.

After the close of trading, Yahoo disappointed investors with a first-quarter outlook that was below Wall Street expectations. Yahoo shares, which ended the regular trading session off 3 cents to $20.81, fell to $18.3 in after-hours trading.

Ahead of the report, volume in Yahoo call options soared to more than 245,000 contracts, or more than four times the average daily volume this month. More than two calls traded for each put contract.

Opinion was mixed on whether the trading pointed to investor bullishness on Yahoo, which has struggled of late and has been overshadowed by Google Inc.

Traders built positions in February options focused on strike prices at $20, $22.50 and $25, potentially indicating investors were placing trades to benefit from sharp movements either up or down in Yahoo stock.

Meanwhile, call volume spiked in Sprint Nextel Corp. and Clearwire Corp. as The Wall Street Journal reported the companies plan to collaborate on a high-speed wireless Internet network.

The potential joint venture with outside funding may be a boon to Sprint, which has faced scrutiny about its expensive plans for the wireless technology.

Volume in Sprint's Feb. 12 calls leapt to 25 times the open interest as Sprint shares added 8.3% to $10.80.

Clearwire volume ticked up to more than 12 times the daily average this month. As Clearwire shares jumped 23% to $15.34, the Feb. 15 calls were most active.