Make the Call on This Option Play
After a recent move higher, a correction near strong chart support sets American Tower (AMT) up for a new rally, writes John Kmiecik of InvestorPlace.com, and investors can capitalize by buying long call options.
It’s not easy to find a potential bullish option play in this rather bearish environment. In fact, it probably isn’t easy to find even a bearish option play with many stocks being extended to the downside. Here’s a potential trade idea on American Tower (AMT), a stock that has had a bullish run-up but now has declined to an area where it might just be able to make a move higher once again.
American Tower Corporation is a real estate investment trust (REIT) and operates as a wireless and broadcast communications infrastructure company. It develops, owns, and operates communications sites.
The company’s rental and management operations include leasing antenna space on multi-tenant communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries
The Trade: Long AMT June 65 calls for $1.70 or less
The Strategy: Buying a call is an option strategy that can take advantage of a bullish outlook on a stock. A long call can profit if the stock rises and the call premium increases to an amount more than was paid.
Maximum profit is essentially unlimited with a long call because the stock can continue to rise, and the maximum loss is $1.70 if AMT finishes below $65 at June expiration.