Shares of industrial rental and leasing firm Fortress Transportation and Infrastructure Investors (FTAI) have been in a downtrend since June. One trader sees a rebound ahead, if not already underway given the rise in shares in recent sessions.
That’s based on the April $28 calls. With 124 days until expiration, over 13,450 contracts traded against a prior open interest of 236, for a 57-fold jump in volume. The buyer of the calls paid $1.50 for the trade.
Shares recently traded around $24, so the option would move in-the-money if shares rose just over 16 percent from their current levels. That would still leave shares well under their 52-week high near $35.
The aviation leasing and ports transportation company has seen shares make a round trip in the past year, with a flat one-year return. However, shares trade at 9 times forward earnings, and revenue is up 62 percent over the past year, even if the firm is not yet profitable.
Action to take: Income-oriented investors may like shares. While the payout hasn’t grown recently, the stock yields a full 6 percent at current prices. With a potential rebound in shares, investors could enjoy both sizeable income and capital gains.
Traders may like the call options, which have ample time for a potential rebound to play out in the next few months. They’re also inexpensive enough to offer high double-digit returns, even if it means giving up a big dividend to do so.
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.