Shares of rental and leasing service company Fortress Transportation and Infrastructure Investors LLC (FTAI) have been sliding over the past year. However, one trader sees the potential for a move higher in the coming months.
That’s based on the June $28 calls. With 51 days until expiration, 3,592 contracts traded compared to a prior open interest of 123, for a 29-fold rise in volume on the trade. The buyer of the calls paid $0.70 to get into the trade.
Shares recently traded for about $24, so they would need to rise $4, or about 17 percent, for the option to move in the money.
While the company has recently reported losses, revenue is up 93 percent over the past year and shares trade for about 10 times forward earnings. The company’s combination of aviation leasing, energy storage and transportation, and offshore equipment makes for an unusual conglomerate.
Action to take: Investors may like shares here, as the stock yields about 5.4 percent at current prices. However, the company hasn’t raised the dividend over the past year, although that could change as earnings improve.
For traders, the June calls are an inexpensive bet on a move higher in shares from here. They can likely deliver mid-to-high double-digit returns in the coming months thanks to their low price. Traders should look for a quick move higher and take quick profits.
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.