The Usual Unusual : American Tower Corp (AMT)

While looking for unusual activity, I found this interesting company called American Tower Corp (AMT). Yesterday, 20,539 March 08 37.5 put contracts exchanged hands. When compared with 1,118 open interests, this is a huge 18times volume in a day that raised my eyebrows.

amt-375-put-trade.png AMT is to announce Q4 earnings on Feb 25th before market opens. Wall street is expecting $0.08/shares on $370million revenues, so to me this transaction suggest action around earnings (either before or after). One thing which I can’t pin is this, is this a single purchase/sale? So, I looked at 1 min intra-day chart of AMT, and it seems this was one trade i.e. 20,000 contracts in one go. Assuming $1.25 average price, this is a $2.5million dollar deal which will only make money if the stock falls below $36.25 vs today’s price $38.84 by March ’08 expiration.

Who is AMT:

American Tower Corporation is a wireless and broadcast communications infrastructure company with a portfolio of over 22,000 owned communications sites. The Company’s portfolio includes approximately 20,000 owned tower sites in the United States and over 2,500 in Mexico and Brazil. In addition, to its owned tower sites, the Company offers access to over 10,000 rooftop and tower sites in the United States that it manages for third parties. American Tower Corporation also operates in-building distributed antenna systems in malls and casino/hotel resorts. Its primary business is leasing antenna space on multi-tenant communications sites to wireless service providers and radio and television broadcast companies. The Company operates in two business segments: rental and management and network development services.

According to msn money, the earnings are expected to grow 293.7% in 07 and over 62% in 08. Those are rich growth rates. Price/Earnings ratio is 142 vs 17 for the industry/sector, with PEG over 3.5. No doubts, earning estimates are trending higher (about 14% up vs 60days ago’s estimates) so analysts are expecting upsides. It’s also a highly ranked stock on momentum list that is expected to outperform general markets by a wide margin.

Whatever it is, it seems investors are betting for high growth and in case it falters, the stock might be punished hard which is what this 20k trade suggests to me. What does it suggest to you?

Profitable trading, OP



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2 responses to “The Usual Unusual : American Tower Corp (AMT)”

  1. Dave Avatar

    Looks like today I’m seeing 20,000 + Mar 08 37.5 puts and about the same number of 40 calls. So has somebody set up a strangle?
    I’m new at looking at numbers and figuring out what’s going on

  2. OptionPundit Avatar

    Dave, I think you are looking at Open Interests (21,541) as the volume today is only 4. But there is almost equal volume for 40 calls and 35 puts. It may very well be a strangle or could be a bull put spread…..or an iron butterfly….many possibilities…

    Have fun trading, Profitable trading, OP

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