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Option Brief: Although AT&T Inc. (NYSE:T) is one of just a handful of Dow components trading in the green this afternoon, put players have regained control in the equity's options pits. At last check, roughly 45,000 puts have changed hands, compared to 26,000 calls. T's June 33 put has received notable attention, and by the looks of it, a number of traders are betting on (or hedging against) the stock to retreat to levels not seen since late March over the next several weeks.
More than 5,100 contracts have changed hands at this out-of-the-money strike, two-thirds of which have done so at the ask price, pointing to buyer-driven volume. Plus, implied volatility is up 1.4 percentage points, hinting at the initiation of new positions. As touched upon, T hasn't traded south of $33 on an intraday basis since March 19, and it would require the stock to drop nearly 10% in order for the put to move into the money. As such, delta on the option is docked at negative 0.069.
However, no matter their motives, the most the traders stand to lose is the initial premium paid, should T maintain its perch atop the $33 mark through the close on Friday, June 20 -- when back-month options expire. Thankfully, Schaeffer's Volatility Index (SVI) of 15% for AT&T Inc. ranks in the 38th annual percentile. Simply stated, premium on T's short-term options is relatively inexpensive at the moment, from a volatility perspective.
Heading into the final hour of today's trading, AT&T Inc. (NYSE:T) is up 0.8% at $36.50, and has now rallied 15% since hitting a multi-year low of $31.74 on Feb. 6. Looking ahead, Wall Street will be anxiously awaiting T's formal bid for DIRECTV (NASDAQ:DTV), expected to be unveiled in the coming weeks.