Unusual Options Activity: Altice USA (ATUS)

Telecom provider Altice USA (ATUS) is down 70 percent over the past year, amid a substantial drop in the company’s earnings. One trader sees a rebound in the second half of the year.

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  • That’s based on the January 2024 $3 calls. With 210 days until expiration, 10,061 contracts traded compared to a prior open interest of 176, for a 57-fold rise in volume on the trade. The buyer of the calls paid $0.38 to make the bullish bet.

    Altice shares recently traded for about $2.35, so shares would need to rally about 28 percent for the option to move in-the-money. That’s still well under the stock’s 52-week high of $13.17.

    While earnings have dropped by over 80 percent  in the past year, shares trade at about 8 times forward earnings. And Altice goes for about 0.12 times its price to sales, an inexpensive metric. However, the company’s massive debt levels are likely holding shares back now.

    Action to take: Shares are making new 52-week lows, so even though they’re looking oversold, there may be some more short-term downside ahead. Plus, Altice doesn’t pay a dividend, so investors should look elsewhere in the telecom space for potential returns.

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  • For traders, the January calls could get a bit cheaper in the coming weeks. It’s likely shares will have a snapback rally given how oversold they are, which could lead to high double-digit returns on the calls before expiration. Traders should look for a quick profit on any rebound trade.


    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 of the companies mentioned in this article.