Potential AT&T (T) Trade Has 4.83% Downside Protection

For a hedged play on AT&T (T) MarketIntelligenceCenter.com’s patented trade-picking algorithms selected a Mar 15, 2019 $30 covered call for a net debit in the $28.92 area. That is also the break-even stock price for the covered call. This trade will return 3.69%, or 21.42% annualized (for comparison purposes only), in 63 days. This covered call also provides 4.83% downside protection.

A lower-cost play on AT&T would use a longer term call option in place of the long position in the stock. Look at the Jan 17, 2020 $25 call and the same sold call for a net debit of $4.53.This trade only has 2.86% downside protection, but the assigned return rate rises to 10.37% or an annualized rate of 60.11% (for comparison purposes only).

The current 52-week low is $26.80 and the 52-week high is $39.29. AT&T stock has been showing support around $29.57 and resistance in the $30.89 range. The stock closed Jan 10, 2019's trading session at $30.39. 

You May Also Like