America Movil S.A.B. de C.V. (NYSE: AMX )
has not announced any news since its earnings report on April 30,
but at least one investor traded a hefty number of calls on a bet
that shares of the Mexican wireless communications company could
experience limited upside throughout the near-term.
AMX closed down 48 cents, or nearly 1%, to $50 on Tuesday. The
company announced earnings of 52 cents a share on April 30, and has
not announced any news since that date. Options action during
Tuesday's session suggests an investor is looking for a ceiling in
the stock and calling for implied volatility to come in throughout
the next month.
By the end of today's session, more than 8,200 at-the-money (
) June 50 calls changed hands for an average premium of $2 per
contract. These calls were home to open interest of 439 contracts,
indicating the majority of the volume was likely initiated to open.
It looks like investors sold these options calling for the stock to
reach a ceiling at the breakeven price of $52. If the stock remains
below this level, the investor could make a maximum profit of the
premium paid ($2 per contract). On the other hand, if the stock
rallies higher than the breakeven, investors could incur
significant losses as the stock moves higher.
A closer look at this action suggests the investor traded these
calls with stock, which means the investor most likely put on a
volatility play instead of only calling for limited upside. Implied
volatility of the June 50 calls is 30% compared to the stock's
30-day historical volatility of 28%. We saw many trades like this
today as investors put capital to work in the days following the
dramatic increase in implied volatility in the market.