Unusual Options Activity: AT&T (T)

Shares of telecom and media play AT&T (T) have been volatile in recent sessions. Shares rallied over 10 percent in November, then gave up most of those gains in December. But one trader sees the pullback as the start of a new possible rally.

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  • That’s based on the action in the January 2021 $28.50 calls. The just in-the-money options expire in 22 days. Over 675 of the contracts traded against a prior open interest of 104, for a 6-fold gain in volume.

    The buyer paid $0.72 for the contracts on average.

    The telecom company has reported declines in its core business over the years, but has also made some strategic acquisitions to move away from the slow-growth, highly-regulated tech space.

    Action to take: The options make sense, given how shares have gone from overbought in the short-term to oversold rather quickly. Traders can likely grab a mid-to-high double-digit gain on even a small bounce in shares.

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  • Traders with a longer-term outlook can also buy shares here. At a price under $30, shares offer a dividend yield just over 6 percent. While the stock hasn’t been the biggest percentage mover, grabbing a double-digit yield in shares while getting a hefty dividend payment makes for a reasonable opportunity on the stock side.