Comcast Corporation CMCSA shares are up 28.2% year to date, but at least one large option trader is betting there is more upside ahead in the next couple of months.
On Wednesday, Benzinga Pro subscribers received options alerts related to seven large Comcast option trades.
At 10:09 a.m. ET, a trader sold 6,000 Comcast put options with a $40 strike price expiring on Sept. 20 at the bid price of 22.1 cents. The trade represented a bullish bet worth $132,600.
At 10:37 a.m. ET, a trader sold 512 Comcast call options with a $45 strike price expiring on Sept. 20 near the bid price of 46.4 cents. At exactly the same time, likely the same trader executed another order for 512 Sept. 20 Comcast calls with a strike price of $42.50. This second order went through at $1.784, near the midpoint of the bid and ask.
Three more Comcast option trades went through in rapid succession starting at around 11:04 a.m. ET. The trader bought a total of 3,190 Comcast call options with a $45 strike price expiring on Oct. 18. The calls were purchased at ask prices of between 90.1 cents and 91.2 cents and represent a bullish bet of more than $287,000.
About one minute later, potentially the same trader sold 2,000 Comcast put options with a $40 strike price expiring on Sept. 20 at the bid price of 20.1 cents. The trade represented a bullish bet worth $40,200.
Why It's Important
Even traders who stick exclusively to stocks often monitor option market activity closely for unusually large trades. Given the relative complexity of the options market, large options traders are typically considered to be more sophisticated than the average stock trader.
Many of these large options traders are wealthy individuals or institutions who may have unique information or theses related to the underlying stock.
Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there’s no surefire way to determine if an options trade is a standalone position or a hedge. In this case, given the relatively small size of the trades by institutional standards, they are unlikely to be hedges.
More Bullish Momentum?
Last month, Comcast reported an impressive second quarter, and analysts took note. Bank of America analyst Jessica Reif Ehrlich reiterated her Buy rating and $58 price target for Comcast and said the company’s broadband business continues to impress.
“Comcast’s 2Q results once again illustrated the benefits of a scaled operator with a leading, high-margin broadband business,” she wrote.
CFRA analyst Tuna Amobi reiterated his Strong Buy rating and $50 price target.
“Due to the relatively seamless integration of Sky, we see Comcast pivoting to a broadband-led connectivity strategy, with some notable traction on its nascent wireless offering, ahead of a planned April '20 debut of its new streaming Offering,” Amobi wrote.
Wednesday’s bullish option traders may agree Comcast is well-positioned to continue to impress the market in the next couple of months ahead of its streaming launch next year.
Comcast's stock traded around $43.86 per share at time of publication.
Photo courtesy of Comcast.
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