AT&T's stake in WarnerMedia will be spun off, with lower dividend payments
The shares of AT&T Inc. (NYSE:T) are off 4.8% at $24.31 this afternoon, after the company revealed plans to spin off its stake in WarnerMedia, once its merger with Discovery Communications (DISCA) is done. According to reports, shareholders will receive 0.24 shares of Warner Brothers Discovery for every AT&T share they own, as well as an annual dividend payment of $1.11 per share -- nearly half the former $2.08 payment.
AT&T stock's options volume is hot following the announcement, with 218,000 calls and 161,000 puts traded so far, or double the intraday average. The most popular contract by far is the March 25 call, indicating these traders still see upside for T laying ahead.
A broader look shows options players have heavily favored puts. This is per the security's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 84% of readings from the past 12 months. Echoing this, T's Schaeffer's put/call open interest ratio (SOIR) stands in the 88th percentile of the last year.
After rising above long-term pressure from the 80-day moving average to start off the year, T tumbled 8.4% on Jan. 26 to close below the trendline once again. AT&T stock is still struggling to conquer that moving average, and longer term the security now sports a 15% year-over-year deficit.
