Today's tickers: VZ, T, AAPL, RIMM & SYMC
VZ – Verizon Communications Inc. – The severe crimp on consumer spending as unemployment bites has lead Bernstein Research to predict a slowdown in wireless growth as well as the performance of the landline segment for telecoms. The analyst downgraded Verizon from 'market perform' to 'underperform' and said that it was skeptical of the share price pattern in the fourth quarter where Verizon traded more like a staple than a late-stage cyclical stock. Today, investors paid heed to the call for a target of $27 per share rather than $32 per share and pummeled VZ hard as its shares fell by 7.25% to $32.13. Implied volatility jumped by as much as 16% to 44% as uncertainty over the company's prospects were put into the spotlight. However, the option trading patterns told a more reserved story. January calls at the 30 strike were bought at 2.77 and those at the 32.50 were sold for a 94 cent premium. On the put side, there was decent activity in the 30/35 spread in which investors sold the higher strike and bought the lower strike for a net 2.60 credit. One might have expected a bearish strategy to involve a debit spread, but in this case investors don't necessarily share the pessimism of the analyst.
T– AT & T Inc. – Implied volatility gained 13% to 43% at fellow telecom provider AT&T as its shares reacted to the Bernstein downgrade as they fell 4% to $28.22. The broker now forecasts a share price of $27 instead of $35 for its shares. Although there was notable put buying using January 29 and 30 strikes, investors seemed more inclined to spend option premium on 27.5 strike calls expiring later this month as they scooped up more than 8,000 calls at a cost of 1.05.
AAPL – Apple Inc. – A short and brief message aimed at the Apple community explained that Steve Jobs would triumph over speculation about his tenure at Apple. So it seems that last week's rumors over severe health deterioration of the CEO were ill-founded. The direct news that Jobs might have a hormone imbalance starving his body of necessary proteins and so causing weight loss has put a bid under shares of the iPhone-maker today sending them 4.5% better to $94.80. There is good two-way traffic in its options especially at the January 95 and 100 strike calls and the same expiration puts.
RIMM – Research in Motion. –Blackberry-maker RIMM is also 5.3% better today at $44.13 as option traders express a near-term $50 share price target as they pay a 40 cent premium for the right to pay that price for shares in the company should its shares keep rising .
SYMC – Symantec Corp. – Option traders are taking advantage of a 3.4% decline in its share price to $14.31 to place bullish trades on the stock as they buy January 15 strike calls at 1.10. Investors are also selling February expiration puts at the same strike in anticipation that these will expire worthless should SYMC rally back above the strike price. In the April contract the 10 and 15 strike puts were being spread implying a relatively bearish play. Implied volatility gained 13% to 66% as shares came off a strong rally to close the week.