Billion-Dollar AT&T Loan Boosts Stock

Options players are favoring calls today

by Laura McCandless

Published on Apr 7, 2020 at 2:37 PM

AT&T Inc. (NYSE:T) announced this morning a $5.5 billion term-loan agreement to give themselves "financial flexibility" during the global pandemic, and reaffirmed its commitment to pay a dividend. In response, the shares of the mobile are up 4% at $30.62 in afternoon trading.  

It's been a slippery slope downward for AT&T during the past few months. The equity hit a nine-year low of $26.08 on March 23, with its 10-day moving average guiding the stock lower. While T has since toppled this trendline, it is now contending with pressure at the $31 region, and is down 22.1% in 2020. 

Coming into today, six analysts considered T a "strong buy" or "buy," while the remaining 10 called it a "hold" or worse. Meanwhile, the 12-month consensus target price of $36.7 is a 19.7% premium to current levels. 

Puts have been dominating the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.06 puts have been bought for every call in the past 10 days. This ratio sits in the 100th percentile of its annual range, suggesting the appetite for puts is much higher than usual. 

Today, however, sentiment has reversed. So far, 159,000 calls have crossed the tape -- three times the intraday average -- compared to 49,000 puts. Most popular is the April 31 call, where new positions are being opened. 


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