Unusual Options Activity: Lumen Technologies (LUMN)

Shares of telecom company Lumen Technologies (LUMN) jumped higher at the start of November, reversing a downtrend in place since April. One trader sees the rally continuing in the months ahead.

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  • That’s based on the June 17 $20 call options. With 202 days left on the trade, over 3,965 contracts traded hands, a 31-fold jump in volume from the prior open interest of 128. The buyer of the calls paid $0.30 to make the trade.

    Shares recently traded just under $14, so the shares would need to rally about 45 percent for the options to move in-the-money. With a 52-week high of $16.60, it would require a big rally in shares to move above its prior high.

    Earnings are up at the telecom company in the past year, rising nearly 48 percent, even as overall revenue has slightly declined as the firm has moved to modernize.

    Action to take: Shares look attractive here. Besides having further upside potential, the stock pays a large dividend of 7.3 percent right now. Typically, such a large yield indicates that the stock is unlikely to appreciate substantially.

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  • Traders may like the June calls. They have plenty of time to play out, and are inexpensive enough to provide triple-digit returns on any substantial move higher in shares in the months ahead.


    Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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