Unusual Options Activity: Lumen Technologies (LUMN)

Shares of telecommunications company Lumen Technologies (LUMN) have risen about in-line with the overall market in the past year, but shares have been trending down in recent months. One trader sees the downtrend in shares continuing.

  • Special: This Company’s Share Price has Increased 1650% Since 2016
  • That’s based on the December $12 puts. With 60 days until expiration, 5,020 contracts traded hands, a 35-fold rise in volume from the prior open interest of 142. The buyer of the puts paid $0.73.

    Shares currently trade around $12, making this an at-the-money trade. Shares are down about 25 percent from a 52-week high of $16 per share.

    The company is currently operating at a loss, but shares trade at less than 10 times forward earnings, which have been growing slightly over the past year.

    Action to take: Shares are shaping up to be a bit of a value play right here. Today’s shareholders can potentially win in a turnaround for shares, and the stock yields 8.2 percent at current prices. However, investors should wait for a turnaround in shares before buying.

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  • For traders, this short-term put option plays well to the current downtrend in shares. It’s inexpensive, but can deliver mid-to-high double-digit returns in the coming weeks, and could do very well if the market has a large down day.

     

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