AT&T Inc. (NYSE: T) announced this morning that it will raise its quarterly dividend to 0.40 per share and buy back 400M shares. The company also expects its television service, known as U-verse, to be available to 30 million customers by 2010. The service, which will be delivered over phone lines, is expected to reach more than 1 million subscribers by the end of 2008. T expects the service to contribute to expected adjusted earnings growth in the double-digits and mid-single-digit or better revenue growth through 2010. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on T.After hitting a one-year low of $32.70 in January, the stock hit a one-year high of $42.97 in September. T opened this morning at $39.64. So far today the stock has hit a low of $39.06 and a high of $40.03. As of 10:35, T is trading at $39.99, up $2.09 (5.5%). The chart for T looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 6 weeks as long as T is above $35 at January expiration. AT&T would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.
T hasn't been below $35 since last January and has shown support around $36 recently. This position could be protected by strong support the stock has formed just above $36 over the past month.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in T.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 6 weeks as long as T is above $35 at January expiration. AT&T would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.
T hasn't been below $35 since last January and has shown support around $36 recently. This position could be protected by strong support the stock has formed just above $36 over the past month.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in T.
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Reader Comments (Page 1 of 1)
12-11-2007 @ 1:52PM
Darrnell10 said...
AT&T can be sued by comcast for tring to get back in the TV market due to the fact the AT&T 's Cable Division was bought out by Comcast for AT&T's Over control of the market, they were Split up by Congress in fact , so AT&T will have to stay with Sateillte TV for now, Fact Reason's are that AT&T same company sold all it's right's for the Cable market , but didn't have any thing to do with the satellite markets, thats whats AT&T is working on now , but again they can not go back to the cable market, so that's where AT&T is left out .
12-12-2007 @ 5:28PM
LarryCivic said...
the assessment that AT&T can't get back into the Cable TV business is interesting, but I would suggest it is mostly wrong. First of all the corporate entity that sold AT&T Cable no longer exists. It was purchased by SBC Communications. SBC Communications then changed it's name to AT&T to benefit from the exception strenth of the AT&T brand name domestically and internationally. Secondly, you will find the service being deployed to provide entertainment and information services to compete with the Comcasts and Time Warner's of the world is technically defined as an Internet service. It has a completely different architecture, it simply provides some competing and in some cases overlapping services. I'm sure the folks at AT&T would tell you those services are both more and better services than cable TV. The devil is alwys in the details.
12-12-2007 @ 6:53PM
Darrnell10 said...
Comcast own the line of AT&T Cable and AT&T can't go back in the market due to the Agree ment they made with Comcast And the U.S.Goverment, but they can go into the satelite market due to the fact they were not banned from that market.