American Tower Corp (AMT) Long Strangle Option
Looking back at the historical options activity on American Tower at the end of May when its shares were publicly trading at $40.99 one investor appears to have sold puts in exchange for calls.
Today's sell-off in stocks highlights the pullback from a recent gain to $47.50 for this stock, for which a bullish strategy seems to have paid off well.
- Ahead of the two-month rally in its stock, an investor sold 10,000 put options at the $35 strike expiring in January 2011
- bought the same number of $45 strike calls with the same expiry.
- Each contract was worth $2.00 at the time. (Click chart to enlarge)
Today the short put position appears to have been covered at 70 cents while the calls traded at $4.00 each. The position was effectively cost nothing to implement was today sold for a gross $3.30 gain.
This is what we want to see! This is nice. A long term strangle play that moves like we want it to. It is a perfect example of how the stock moves one way and the value of one option increases to the point that it is worth taking profits and buying out our positions. We all should take note of this type of trade.
Disclosure: No position