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Option Brief: AT&T Inc. (NYSE:T) is off 0.4% to hover at $34.81 today, amid news that the company is offering up to $450 to T-Mobile US Inc (NYSE:TMUS) customers to switch wireless service providers. Meanwhile, the stock has seen a surge in bearish options activity, with roughly 18,000 puts changing hands so far -- double the expected intraday norm.
Most popular is the weekly 1/10 34.50 strike, which has seen north of 5,700 puts cross the tape -- 85% of them at the ask price, pointing to buyer-driven activity. This option presently holds open interest of fewer than 2,600 contracts, and implied volatility has ticked higher, signaling the initiation of new long positions.
By purchasing the puts to open, the traders are betting on T to backpedal south of the strike price by the close on Friday, Jan. 10, when these weekly options expire. The delta for this put rests at negative 0.58, implying it has a 58% chance of being in the money at expiration. However, failure to retreat below the $34.50 mark will simply result in a loss of the initial cash outlay.
This skepticism toward AT&T Inc. (NYSE:T) isn't too surprising, considering the stock sits roughly 1 percentage point below breakeven on a year-over-year basis. What's more, the shares continue to trade south of their 40-week moving average, which has acted as resistance since early August.