Is It the End of the Road for Portugal Telecom SGPS SA (PT)?

Portugal Telecom, SGPS (ADR) (NYSE:PT) has plunged 13.7% to $0.82 -- and earlier hit an all-time low of $0.79 -- on news the company is being investigated by the Portuguese Prosecutor General's office for fraud. While this negative price action is nothing new for a stock that's surrendered nearly 83% of its value over the past 52 weeks, it's likely coming as just another blow to option bulls who have kept the faith.

In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PT has tallied a 50-day call/put volume ratio of 25.58, which ranks in the 75th percentile of its annual range. In other words, calls have been bought to open over puts at a faster-than-usual clip in recent months.

Echoing this is call-skewed trend is PT's Schaeffer's put/call open interest ratio (SOIR) of 0.44. Not only does this show that call open interest more than doubles put open interest among options slated to expire in three months or less, but it rests lower than 63% of similar readings taken in the past year. Simply stated, short-term speculators are more call-heavy than usual toward PT.

In the front-month series, specifically, peak call open interest can be found at the January 2015 2.50 strike, where 6,339 contracts currently reside. A number of positions have been bought to open here in recent months, meaning traders were betting on Portugal Telecom, SGPS (ADR) (NYSE:PT) to be sitting north of $2.50 at next Friday's close -- when the series expires. Should the calls expire worthless, though, the most the buyers stand to lose is their initial cash outlay.