Signal Says Steer Clear From This REIT

An unwinding of optimism in AMT's options pits could add even more headwinds

Deputy Editor
Jan 17, 2023 at 12:44 PM
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Real estate investment trust (REIT) American Tower Corp (NYSE:AMT) is 0.6% higher today, last seen trading at $234.18 and heading toward a seventh-straight win. The stock is stepping up early in 2023, already boasting a 10.3% year-to-date lead after three straight weekly wins. However, this rally has put AMT within striking distance of a historically bearish trendline. 

Specifically, American Tower stock is trading within one standard deviation of its 160-day moving average, after months of trading below the trendline. According to a study from Schaeffer's Quantitative Analyst Rocky White, five similar signals occurred during the last three years. One month later, the stock was lower all five times, averaging a 3.9% drop.

AMT Chart January 172023

A shift in the options pits could weigh. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), American Tower stock sports a 10-day put/call volume ratio of 4.62, which stands higher than 99% of readings from the past 12 months. 

Weighing in with options could be the route to go, as AMT's Schaeffer's Volatility Index (SVI) 27% ranks higher than just 26% of readings from the past year. This means options traders are pricing in low volatility expectations.  Furthermore, its Schaeffer's Volatility Scorecard (SVS) sits at a 95 out of 100, meaning American Tower stock has exceeded option traders' volatility expectations during the past year.

 

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