AT&T DISH-ing It Out?

DISH Network (DISH) may be facing more than just stiff cable competition these days.

A wholly-owned subsidiary of AT&T (T), Gateway Rivers Insurance elected yesterday to put $500 million worth of debt back on DISH. This is a clear signal that AT&T’s interest in a strategic partnership with DISH has possibly waned, and spells trouble for DISH.

DISH was down roughly 6% on the news yesterday, with significant volume in excess of 4.5 million shares traded before the market close. The options market has responded to this news as well, with significant volume on the July 30 put, as well as the Sep 30, 32.5, & 35 call contracts. The July 30 straddle sells for $3.25, which indicates the market predicts a range of $26.75 to $33.25 between now & July expiration.

So, the market predicts a 10% move in either direction in the next 30 trading days based on the current stock price of $31.08. DISH’s next earnings report is due out August 11^th, with the First Call Research estimate at 61 cents per share.

Disclosure: none