Shares of communications real estate investment trust American Tower Corporation (AMT) have been trending higher in the last year, although they’ve flatlined in recent months. One trader sees a deep value in shares and the potential for them to move higher.
That’s based on the January 2023 $150 calls. With 389 days until expiration, 1,770 calls traded against a prior open interest of 121, for a 15-fold rise in volume. The buyer of the calls paid $131.65 to make the trade.
Shares of the company recently traded around $281, meaning that the option is already $130, or about 87 percent, in-the-money. With a price around $131.65, the buyer of the call is paying nearly no premium relative to the current price of shares.
Action to take: AMT is an interesting play on the telecommunications industry. It has solid profit margins and steady growth, and shares yield 2 percent at current prices with plenty of dividend growth down the line. The downside? Shares of REITs tend to be conventionally expensive, and AMT is no exception.
Traders may like an option trade as well, although at $13,165 per contract, the January 2023 $150 calls may be a bit more expensive. Traders can use a lower strike price to take advantage of any rally in shares in the coming years.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.