Verizon options are among the most active by volume on Monday morning after a massive bullish spread was initiated in the January 2016 expiry calls. Shares in Verizon are up roughly 0.50% on the day at $49.13 as of 11:00 am ET.
More than of 221,000 option contracts have changed hands on Verizon today, or roughly 3.5-times the average daily volume for the stock of 62,000 contracts. The bulk of the overall volume is part of a call spread that looks for shares in Verizon to rally more than 20% during the next nine months. One options market participant appears to have purchased 100,000 of the Jan’16 55.0 strike calls at a premium of $0.46 each and sold the same number of calls at the Jan’16 60.0 strike at a premium of $0.11 apiece.
Net premium paid of $0.35 per contract implies an effective breakeven share price of $55.35, or an approximate 13.0% rise in the price of the underlying from the current level. The trade makes maximum potential profits of $4.65 per contract, or a total of $46.5 million, in the event that VZ shares jump 22% to top $60.00 at expiration next year. Shares in Verizon last traded above $60.00 back in January of 1999.
Chart shows 16-year chart of Verizon