Option Traders Take Note of AT&T Inc., Nokia Corporation Partnership

AT&T Inc. (NYSE:NOK) and Nokia Corporation (ADR) (NYSE:NOK) unveiled a new 4G LTE wireless network

by Karee Venema

Published on Feb 9, 2016 at 1:50 PM
Updated on Feb 9, 2016 at 3:28 PM

Earlier today, AT&T Inc. (NYSE:T) and Nokia Corporation (ADR) (NYSE:NOK) unveiled plans to introduce a new 4G LTE wireless network in the second half of 2016. While the news has helped boost NOK up 0.2% to $5.85, T is following the broader telecom sector lower -- off 1.6% at $36.53. Regardless, speculators in both stocks' options pits are likely cheering today's respective price moves.

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, speculators have bought to open 51,985 T puts over the past 10 sessions, compared to 39,581 calls. What's more, the resultant put/call volume ratio of 1.31 rests in the 80th annual percentile.

Drilling down, T's January 2017 35-strike put has seen the largest rise in open interest over the past two weeks, and it looks as if some of this activity may have been of the buy-to-open kind. If traders were indeed initiating new long positions here, the goal is for T to retreat south of $35 by January options expiration.

Technically, AT&T Inc. has been making strides since bouncing in the $33-$34 region in late January. In fact, the shares are boasting a month-to-date gain of 1% -- versus a 5% decline for the broader S&P 500 Index (SPX) -- and hit an annual high of $37.12 yesterday.

NOK, meanwhile, sports a 20-day ISE/CBOE/PHLX call/put volume ratio of 2.26, meaning more than two calls have been bought to open for each put over the past month. Over the last two weeks, it looks as if a number of call buyers have initiated fresh positions at the weekly 2/5 7.50 strike. If this is the case, the goal is for the shares to climb above $7.50 by this Friday's close -- a time frame which includes NOK's fourth-quarter earnings report, due out Thursday morning.

On the charts, NOK has been in freefall since a mid-January rejection at $7.50 -- a move only exacerbated by a Feb. 1 bear gap, which sent the shares tumbling to levels not seen since August. Should Nokia Corporation fail to take move north of $7.50 by week's end, however, the most this recent batch of call buyers stands to lose is the initial premium paid.

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