Markets

Bull turns bearish as AT&T hits key level

AT&T is consolidating below its 50-day moving average, and one bull is turning bearish.

optionMONSTER's tracking systems detected the purchase of 27,434 August 26 puts for $0.15 and the sale of an number of August 30 calls for $1.13 and June 30 calls were sold for $0.70. All three transactions appeared at the same time.

Volume was below open interest in June but not August, which suggests that an existing long position in the front month was closed and that a new downside strategy was opened for later in the summer. The trader collected a credit of $1.68 and will profit if the telecom giant pushes lower. He or she will also lose money to the upside.

T fell 0.36 percent to $30.68 in morning trading. It exploded higher in late March and continued higher after its last earnings release on April 20, when the company surprised analysts by adding subscribers. But revenue missed consensus forecasts, and earnings were only in line.

The shares topped at $31.94 in early May, the same area where they traded in September 2008--immediately before the financial panic. Many companies have encountered resistance at comparable levels as the market rebounded in the last two years.

The bearish trade pushed total option volume in T to 5 times greater than average so far today.

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

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

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