Calls Purchased in AT&T

AT&T (NYSE: T) announced today that it had won a $5 million contract from the Federal Trade Commission to provide communications services to the agency. The stock is currently trading down by 0.64%, at$24.96, but one trader is betting that the stock can pop through $27 by January.

The AT&T Jan 2011 $25 calls were purchased 14,617 times this morning, on the offer, for $1.83. The volatility of these options is trading at a discount to both implied and historical volatility (both currently at 21%) making this a smarter way to play upside in the name than simply purchasing common stock.