The share price of the UK’s mobile-telecom operator Vodafone Group Plc (NASDAQ: VOD) declined below $30 in the final week of August, but quickly managed to climb back above the $30 level in the first few days of September. The primary reason attributed to the sharp decline was a large trade executed by a market participant in the options market. As much as 2,230 put option contracts expiring on August 30 were sold for $0.16, while the same number of put option contracts expiring on August 26 were bought. Naturally, such trades would keep even the bullish investors at bay. In line with the large speculative option trade, the shares fell in the last week of August. However, considering the strong growth prospects for the company, as explained below, we believe that the uptrend will resume soon. Vodafone closed at $30.90 on Monday.
The London-based company reported fiscal 2017 first-quarter revenue of €13.38 billion, down 4.5% from €14.01 billion in the first quarter of fiscal 2016. For the quarter ended June 2016, the company reported organic revenue growth of 2.2%. The Deutsche Bank analysts expected organic revenue growth of 1.9%.
Despite low roaming fees, barring the UK, other European countries (Germany, Spain, and Italy) recorded stable revenue growth in the range of 1.2% to 1.6%. In the AMAP (Africa Middle-east and the Asia Pacific) region, Vodafone reported a revenue growth rate of between 4.4% and 19.4%.
Earlier in August, the European Commission gave conditional approval for Vodafone’s proposed $1.2 billion joint venture deal with the US cable operator Liberty Global Plc (LBTYA). As per the approval, the two enterprises are allowed to operate in Netherland provided Vodafone divests its holding in the Dutch consumer fixed-line business. The condition was basically issued to prevent market monopoly. Vodafone stated that it has received interest from a potential buyer for the fixed-line business.
Last Wednesday, the CNBC-TV18 channel reported that India’s third-largest telecom operator Idea cellular is considering the possibility of a strategic deal with Vodafone. If the deal goes through, then the combined subscriber base of Vodafone and Idea would be higher than India’s current largest telecom company Bharti Airtel.
The chart reveals undeniably strong support for the stock at 30.60. The next major resistance for the stock lies at 32.40. The stochastic indicator is near the oversold region. Thus, the possibility of a strong uptrend in the share price exists as of now.
So, a binary options trader can pick a one touch call option to benefit from the probable rise in the share price. For the call option, a strike price of $34 or lower should be selected. Similarly, to increase the possibility of success in the suggested trade, a four week time period is necessary for the expiry of the contract.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
