Trade on a Bullish AT&T with Multiple Options

Trade on a Bullish AT&T with Multiple Options
September 10, 2015

 
US telecommunications giant AT&T (NYSE:T), is looking at double digits of growth for 2015 but the company’s share price is not offering any sign of a potential bounce in the near future.

Online selling is a big chunk of AT&T revenues and this is an area the company should focus on moving forwards. The fact that they cover the entire US territory plus have a presence in eleven Latin American countries represents a big advantage for future sales. Especially as the demographics in Latin America is more dynamic.

The company also owns more than ten thousands patents as their research and development department benefit from strong funding each year. It is no surprise that AT&T is leader in bringing new innovations to market, especially in areas such as internet, advanced mobile services, next-generation TV, high-speed internet services and smart solutions for businesses.

Stiff competition may pose a problem for future earnings, but based on the company’s ability to reinvent itself,(and thanks to that powerful research and development department), we can say management clearly has a vision regarding where the company is heading.

However, trading is not only about internal news, earnings and valuations. It is also about the general market we’re in, and expectations set from a macroeconomic point of view, as well as from a global perspective.

The vast majority of AT&T income is from mainland US. Therefore monetary policy and the strong dollar should not influence revenues like it would in a company with presence all over the world. Plus, I would say that the fact that it expanded in Latin America is only a natural decision, and in a way is a form of diversifying assets.

Coming back to the technical picture, their share price has moved in a narrow range for the last three years, namely between $38/share and $32/share regions. Judging by this range we can say that the company is lagging behind many of its rivals, but the path of least resistance on the medium to long term should still be to the upside.

I am favoring a call option from lower levels such as the $31, and with a one month expiration date. When the price starts to move up, I would trade another call option from $33 and $35 as well. I am also favoring a call option if/when the $38 level is broken, as I would be a strength buyer by the time the consolidation area is over. A one month expiration date applies to these as well.

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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