The stock has been weak throughout the second half of this year and the options order flow in the stock has been decidedly bearish over the past 2 weeks. Bearish order flow continued today with a large block of T Oct 31 puts being bought. A trader bought nearly 10,000 Oct T 31 puts for $0.27, paying the offer. This was an aggressive buy adding to the over 20,000 of the same contracts that have been bought over the past 2 weeks. Although the current open interest put/call ratio in T is considered neutral at 1.07 today’s trading will add to the bearish sentiment. With the large amount of bearish order flow we believe that T sets up well for a short position.
Trade:
Short Stock: $33.74
Target #1: $33.21
Target #2: $32.71
STOP: $34.78