Trade bets that Comcast is bottoming

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Comcast's chart is setting up for a potential rally, and option activity continues to reflect positive sentiment ahead of its earnings report before the bell this morning.

Our tracking systems detected the sale of about 20,000 September 18 puts on the cable company's voting stock, which trade under the ticker CMCSA. The transaction, which priced for $0.44, followed bullish call buying in the non-voting CMCSK shares last week.

CMCSA Chart CMCSA fell 0.72 percent to $19.33 yesterday and is up 9 percent in the last month. The stock has been making successively higher lows since March 2009 and following its 200-day moving average higher (red line on chart). It also seems to be finding support above its 50-day moving average, which some investors may consider evidence of a bullish trend (blue line on chart).

Yesterday's put seller hopes that the stock will remain above $18 while time decay eats away the value of the contracts heading into expiration on Aug. 20. The fact that CMCSA bounced above that level last week may have made him or her think that other investors are willing to buy the shares not far below their current price. (See our Education section)

The trade seems to reflect an emerging positive tone in telecom and cable stocks such as AT&T and Verizon. Our tracking systems also detected bullish call buying in Cablevision last week. Additionally, telecom-equipment name Tellabs reported strong earnings and boosted its full-year guidance yesterday because companies in the sector are building out networks.

Overall options volume in the name was more than four times the daily average yesterday.

(Chart courtesy of tradeMONSTER)



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.

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This article appears in: Investing , Options

Referenced Stocks: CMCSA , CVC , T , TLAB , VZ

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