AT&T?s Predicament Rattles Investors As FCC Vote Looms: Options
By Michelle Davis
(Bloomberg) — Traders are bracing for losses in AT&T Inc. before an FCC decision that threatens to upend the way the nation?s second-largest wireless carrier does business.
Demand for options that protect against losses in shares of AT&T rose to the highest level in more than three years relative to bullish ones, data compiled by Bloomberg show. The number of AT&T shares sold short has climbed to the most since 2007.
Proposed rules on how companies deliver data over the Internet, set for a vote next week, would expand Federal Communications Commission oversight allowing it to regulate like utilities not only Internet service providers but also mobile broadband companies from AT&T to Verizon Communications Inc. Investors anticipating that the rules will pass are protecting against the specter of new regulation and the impact it may have on the profitability of the business.
Options trading ?is reflecting some cautious sentiment on the part of investors about the what-ifs of FCC regulation,? Max Breier, a senior equity-derivatives trader at BMO Capital Markets Corp. in New York, said by telephone Feb. 13. ?The likelihood that the proposal will regulate broadband similar to telephone lines will be a negative for telecom service providers.?
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