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4 ways to trade big telecom

"Innovator" T-Mobile may put more pressure on telecom industry leaders as it continues to roll out cheap alternatives, CNBC "Fast Money" trader Steve Grasso said.

"The other names are probably going to take a hit because their margins are going to get squeezed," said Grasso, who owns T-Mobile stock.

The telecom company on Wednesday announced new calling and data plans for businesses. Grasso believes the move will help T-Mobile cut into telecom giants AT&T and Verizon, which account for 87 percent of wireless revenue from businesses.

Pedestrians pass in front of a T-Mobile location in New York.
Scott Mlyn | CNBC
Pedestrians pass in front of a T-Mobile location in New York.

T-Mobile moved about half a percent lower, around $33 per share, in extended trading.

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AT&T and Verizon still look more appealing than T-Mobile, said trader Brian Kelly. AT&T closed 2 percent higher, below $34 per share on Wednesday, while Verizon closed 1 percent higher, above $49 per share.

Trader Pete Najarian looked to a telecom name outside the U.S. He said China Mobile is his favorite stock in the sector, as it has been "crushing it."

The stock closed more than 2 percent higher on Wednesday, above $67 per share.

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Disclosures:

Pete Najarian

Pete Najarian is long AMAT, BABA, BAC, BMY, BP, CSX, DISCA, FOXA, GE, KKR, KO, LLY, LOCO, MRK, PEP, PFE and SAP. He is long calls AAL, AAPL, AMD, BABA, BAC, BK, CAM, CDW, CLR, COP, DAL, FB, FEYE, GE, GM, GRPN, GS, GT, HCP, HPQ, IAG, JPM, KO, KNDI, KRFT, LYB, MSFT, NEE, PEP, RAD, RF, RIG, SPY, SYY, TEVA, UAL, UFS, WFC, WMB, XLNX and XOM. He is long puts BHP. Today he bought RAD calls and SAP.

Brian Kelly

Brian Kelly is long BTC=, U.S. dollar, GLD, CTRL calls, HYG puts, BBRY, BBRY call spreads and TLT. He is short EWA, EWQ, EWZ, EWW, JJC, Canadian dollar, yen and yuan.

Karen Finerman

Karen Finerman is long BABA, BAC, C, FINL, FL, GOOG, GOOGL, JPM, M and KORS. She is short DIA. Her firm is long AAPL, BAC, C, CMLS, DIS, FINL, FBT, FL, GPS, GOOG, GOOGL, GLNG, LPG, IBB, JPM, M, KORS, NAP, OIH, XBI, SUNE and URI. Her firm is long calls URI. Her firm is short MOY, IWM, SPY and USO. Karen Finerman is on the board of GrafTech International.

Steve Grasso

Steve Grasso is long BA, CLVS, EVGN, FB, GDX, GOOGL, IMMR, KBH, KDUS, MHY, MJNA, PFE, POT, SO, T, TMUS and TWTR. His firm is long AMZN, NE, NEM, OXY, RIG, VALE, AVP, KO, MCD amd USO. His kids are long EFG, EFA, EWJ, IJR and SPY.