SBA Communications reports earnings in two weeks, and one trader
is looking for a ramp-up in volatility.
optionMONSTER's tracking systems detected the purchase of about
2,200 September 35 calls for $2.35 and a matching number of
September 35 puts for $1.55. The trade pushed total options volume
in the owner of wireless towers to more the 20 greater than
SBAC rose 4.69 percent to $35.91 in morning trading. It's been
moving sideways all year as it fights resistance around the same
level where it traded immediately before the 2008 stock-market
Today's option trade, known as a long straddle, anticipates a move
outside the recent trading range. It cost $2.90 to implement and
will make money if SBAC falls below $32.10 or rallies above $37.90
by expiration. (See our Education section)
The strategy will also profit if implied volatility increases,
which would drive up option premiums. Implied volatility on SBAC
now stands at about 32 percent and has been slowly inching higher
since March, when touched 29 percent--the lowest level in at least
The trade could make sense because the release of second-quarter
earnings is scheduled for the premarket on Aug. 3, and implied
volatility often climbs shortly before earnings. The company
reported a wider-than-expected loss the last time it published
results on May 4.
Investors also bought about 1,400 August 35 calls for $1.60 to
$1.85 against open interest of 826 contracts, wagering on a pop
when the numbers come out.
(Chart courtesy of tradeMONSTER)
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