Sarah Wasserman (swasserman@sir-inc.com) Telecommunications titan AT&T Inc. (T) said this morning that it plans to buy wireless spectrum from QUALCOMM, Inc. (QCOM) for $1.93 billion. This move is aimed to boost T's 4G network, which has gained a reputation for dropping calls and having slow connections. T is hoping to gain ground over Verizon Communications (VZ), which also boasts 4G service -- and is rumored to begin selling the iPhone in 2011.
From a technical standpoint, T's performance has been nothing to write home about. The stock has added just 4.2% in 2010, and has been range-bound in the $28 to $30 neighborhood for the past few months.
As a result, traders have grown increasingly bearish toward T. During the past two weeks, traders on the International Securities Exchange (ISE) initiated 2.2 T puts for every call, a ratio which ranks above 93.5% of all other readings taken during the past year. In other words, speculators on the ISE have seldom been more put-heavy on the stock.
This trend continued on Friday, with 23,000 puts crossing the tape -- more than double T's expected single-session put volume. T's January 29 put saw the largest change to open interest over the weekend, with 2,573 contracts added. With T trading around $29.16, these 29-strike puts are right at the money.
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