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Option Clips: AT&T Inc., Dollar General, and Alcatel Lucent SA (ADR)

Reviewing notable options activity on AT&T Inc., Dollar General Corp., and Alcatel Lucent SA (ADR)

by 3/20/2014 2:28 PM
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One equity generating buzz on StockTwits today is telecom titan AT&T Inc. (NYSE:T). Meanwhile, discount retailer Dollar General Corp. (NYSE:DG) and France-based IT concern Alcatel Lucent SA (ADR) (NYSE:ALU) have also been active in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • AT&T Inc. (NYSE:T) is 2.8% higher at $33.88, after the firm announced that pre-orders on the Samsung Galaxy S5 begin tomorrow. However, the equity is struggling to surmount its 32-week moving average, which has largely acted as resistance since mid-2013. In any event, the stock's short-term options are in demand today, as its 30-day at-the-money implied volatility (IV) is 8.5% higher at 14.1%. Calls and puts are trading at two and three times the norm, respectively, and it looks like one speculator may be simulating stock ownership with a split-strike version of the synthetic long stock strategy. Specifically, the trader may have bought to open October 34 calls, and funded the position by selling to open October 32 puts.

  • Dollar General Corp. (NYSE:DG) is 0.5% lower at $57.54, but one speculator is rolling the dice on an intermediate-term uptrend for the shares. So far today, DG has seen roughly 50,000 calls cross the tape -- five times the norm. Most of the action transpired at the August 60 call, where a block of more than 35,000 contracts traded on open interest of fewer than 5,200 contracts. Trade-Alert indicates the calls were purchased to open for $3.30 apiece, meaning the buyer will make money if DG is sitting north of $63.30 (strike plus premium paid) -- which would mark a new record high -- when August-dated options expire.

  • Finally, Alcatel Lucent SA (ADR) (NYSE:ALU) has added 1.9% to flirt with $3.95, but still sits 10% lower on the year. In the options pits, puts are flying off the shelves at a rapid-fire rate, with roughly 16,000 contracts traded -- about 10 times the stock's average intraday volume. One options trader is bracing for steeper losses over the next few months, buying to open nearly 12,000 June 2.83 puts for $0.10 each. To profit on the play, the buyer needs ALU to breach $2.73 (strike minus premium paid) by options expiration on Friday, June 20.


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