Show of confidence in emerging telecoms

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Two big emerging-market telecom stocks have been drifting lower for months, but investors apparently think that they're done falling.

optionMONSTER's tracking systems detected heavy put selling in Mobile TeleSystems and VimpelCom, which both operate across Russia and central Asia. In MBT, they wrote more than 8,000 September 19 contracts, mostly for $1.40, and VIP saw the sale of 10,000 September 12.50s for $0.75.

MBT closed the session up 1.49 percent to $21.05, while VIP rose 2.05 percent to $13.94.

Traders often sell puts on stocks they like but don't want to spend cash buying. The strategy lets them collect income in exchange for insuring other investors against losses. (See our Education section)

Both companies are interesting because they operate in giant territories with major growth potential, and quarterly revenue expanded at more than 20 percent in each. VIP has a price/earnings growth ratio of 0.31 times while MBT's is 0.91 times--extremely low numbers for telecom stocks.

We have seen sporadic call buying in MBT, but only recently has the stock shown signs of breaking free of its funk.

Total option volume was nine times the average amount in the name and six times above normal in VIP.



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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: MBT , VIP

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