Unusual Option Activity: Verizon Communications (VZ)

Telecom giant Verizon Communications (VZ) is at its 52-week high following strong earnings last week. One trader sees the potential for a further rally in the weeks ahead.

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  • That’s based on the March $46 calls. With 45 days until expiration, 24,648 contracts traded compared to a prior open interest of 380, for a 65-fold rise in volume on the trade. The buyer of the calls paid $0.15 to make the bullish bet.

    Verizon shares recently traded for just over $42, so they would need to rise just under $4, or about 9 percent, for the trade to move in-the-money.

    That’s aggressive for a telecom stock, but with the stock breaking to new highs, the trend is in the right place.

    While Verizon missed on earnings, its rising revenues indicate further upside for the company operationally in the months ahead.

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  • Action to take: Investors may like shares at current prices or on any drop lower. Verizon pays a hefty dividend of 6.4 percent at current prices.

    For traders, the March $46 calls are aggressive, but are inexpensive enough to see high double-digit gains or even triple-digit gains in the coming weeks. Traders may want to use a big up day for shares in the coming weeks to lock in a quick profit.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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