American Tower (AMT) investor likely exits short-vol position


American Tower Corp. (NYSE: AMT ) has remained quiet after announcing better-than-expected earnings last week, and the stock is in the red so far on Wednesday. Options action on the tape during morning trading suggests an investor closed out of a position that bet on short volatility throughout the long term.

At 10:05 a.m. EDT, 10,000 January 2011 35-45 strangles changed hands. The January 2011 35 puts changed hands for 70 cents per contract, which was the ask price when the volume hit the tape. The same number of January 2011 45 calls crossed the tape for $4 per contract, which was also the ask price at the time of the trade.

Current open interest of the puts is 17,000 contracts. The calls are home to 11,300 contracts of open interest. This options action suggests an investor could have closed out of a short strangle position on a bet that the stock will move more than the trader originally anticipated.

AMT shares dropped more than 2% during morning trading, or 96 cents, to $45.71. The stock is trading just 2% lower than its 52-week high of $47, which could be the case to sell out of a volatility bet calling for a range in the stock. On Aug. 3, AMT announced earnings of 25 cents per share and beat estimates by five cents. The market does not expect another earnings announcement from AMT until the beginning of November.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Options

Referenced Stocks: AMT

Karla Yeh

Karla Yeh

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