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Big Prints In AT&T Put Options As Shares Touch Lowest Since January

Today’s tickers: T, HCP & DMND

T – AT&T Inc. – Heavy trading traffic in AT&T put options today indicates at least one strategist is bracing for the price of the underlying stock to potentially slump to fresh 52-week lows during the next couple of months. Shares in AT&T, down more than 13% since late April, are off 0.80% on the session at $33.61 as of 12:15 p.m. in New York trading. The wireless carrier popped up on our ‘most active by options volume’ market scanner this morning after one strategist purchased roughly 20,000 of the Oct $31 puts for a premium of $0.25 apiece. The trade may be an outright bearish bet that shares in AT&T continue to fall in the near term, or could be a hedge to protect a long position in the underlying stock. The puts make money at expiration if shares in the telecommunications company drop 8.5% from the current price of $33.61 to breach the effective breakeven point on the downside at $30.75. The stock last traded below $30.75 in April of 2012.  

HCP – HCP, Inc. – Options changing hands on healthcare REIT, HCP, Inc., on Wednesday morning look for shares in the name to rally during the next couple of months. The stock, down more than 20% from an all-time high of $53.06 reached in May, trades 0.80% higher on the session at $40.30 as of 11:40 a.m. ET. Trading traffic in HCP call options indicates some traders are positioning for the price of the underlying to rebound. The most actively traded contracts by volume today are the Oct $45 strike calls, with more than 5,000 call options in play against open interest of 1,902 contracts. It looks like much of the volume was purchased for an average premium of $0.22 apiece, thus positioning buyers to profit at October expiration in the event that HCP shares rally 12% over the current price of $40.30 to exceed the average breakeven point at $45.22.

DMND – Diamond Foods, Inc. – Shares in premium snack food provider, Diamond Foods, Inc., rallied almost 20% this morning to a fresh 52-week high of $22.89 after the company issued a strong fiscal fourth-quarter outlook and said it reached a proposed agreement to settle a private securities class action pending against the company. Trading traffic in front month call options today indicates one or more traders are positioned to benefit from continued gains in the price of the underlying through September expiration. According to a press release issued by Diamond, the company plans to release fourth quarter and full year fiscal 2013 earnings in late September. The most traded contracts by volume on DMND thus far in the session are the Sep $24 strike calls, with roughly 600 contracts in play versus open interest of 352 contracts. Time and sales data suggests most of the $24 calls were purchased in the early going at an average premium of $0.63 each. The bullish stance on Diamond Foods may pay off at expiration next month should shares in the name increase 7.6% over today’s high of $22.89 to exceed the average breakeven point at $24.63. Shares in DMND last traded above $24.63 back in May of 2012.  

 

Caitlin Duffy
Equity Options Analyst


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