Trader thinks SBA is hitting a ceiling

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SBA Communications has fought its way back to a key resistance level, and at least one investor is throwing in the towel.

optionMONSTER's tracking programs detected heavy selling of the August 35 calls, which traded more than 4,400 times against open interest of 1,653 contracts. Most of the large transactions priced for $1.50 to $2.05.

SBAC Chart SBAC fell 3.01 percent to $36.03 yesterday after reporting second-quarter estimates Monday that roughly matched analysts' forecasts. Revenue guidance for the third quarter was slightly below consensus.

The stock had touched two-year high of $37.23 immediately before the release on Monday. The shares are challenging an area that has provided resistance since late 2007, which could cause some traders to expect an extended period of consolidation before SBAC pushes higher.

Yesterday's call selling allowed the trader to collect income from that pattern. The strategy is a way that long-term shareholders can make money to reduce their cost basis in a stock. And, if SBAC closes below $35 on expiration, they get to keep the shares and the premium.

Last month an investor purchased calls and puts on the stock, looking to profit from a big move before September expiration. That position remained open through yesterday.

Overall options volume in SBAC was 7 times greater than average in yesterday's session.

(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: SBAC

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