Two weeks ago when shares of AT&T (T) were under pressure following the Justice Department’s opposition to their proposed $85 billion bid for Time Warner (TWX) I laid out a bullish case for the stock into the new year (here: AT&T Coverage). My comment:
To my eye the slightest bit of good news relating to the Feds easing their demands for concessions and T is back above the recent break-down level at $36, leading to a quick close of the deal early in the new year and you could have the stock back towards $40, where it was trading in early July and early Oct when investors felt like a close was imminent
And here is how I chose to express this view:
T $34.60 BUY FEB 35 / 40 CALL SPREAD FOR $1
Buy 1 Feb 35 call for 1.15
Sell 1 Feb 40 call at 15 cents
Now with the stock at $36.65, up $2 since Nov 17th, this trade is now a double and I am going to take the profits and look for another entry as this situation is going to have fits and starts over the next coming months.