Options Trading News

September 18, 2013  Wed 10:44 AM CT

Unusual put trading dominates the option activity in AT&T so far today.
A trader bought 13,650 October 33 puts for the ask price of $0.23 and sold 69,650 October 31 puts for $0.06. Three minutes later, another 13,650 October 33 puts were bought for $0.24, and 13,650 October 31 puts were sold for $0.06. The volume at each strike was above the previous open interest at each strike, indicating new activity.

The trader is opening a ratio spread, which is a relatively low-cost way of betting on a move down. He or she also takes on the risk of having to buy shares if they are below the lower strike. (See our Education section)

T is down 0.89 percent to $34.44 in midday trading. It was at a high of $39 in late April but bounced off support near $33 two weeks ago.

The telecom giant has seen more than 139,000 options change hands overall so far today, already more than 5 times its daily average for the last month.
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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