The Stock That’s Lighting Up Amazon’s New Kindle Fire

AT&T should get a boost from Amazon's updated tablet

By Jon Markman, Editor, Trader's Advantage and CounterPoint Options

AT&T (NYSE:T) isn’t the old-fashioned wireline matriarch of old — now it’s a key beneficiary of Amazon‘s (NASDAQ:AMZN) new Kindle Fire HD tablet, now released for pre-order.

Some of these tablets will come bundled with AT&T’s 4G LTE wireless access, and though AT&T won’t necessarily make much money from the get-go — they’re only charging $50 for a whole year of 4G LTE service — there’s a catch. The $50 plan is capped at 250 MB of data per month. AT&T is planning to make a bundle on data plan overages — kind of like the movie rental stores of old that made their money on late fees.

Telecom tends to be the most successful sector in September, and T should be at the front of that parade going forward. The company offers its 4G LTE wireless service for both Kindles and iPads, so even as the Amazon-versus-Apple (NASDAQ:AAPL) tablet wars continue into the holiday season, AT&T will reap the benefits as a sort of toll collector.

With T stock enjoying 23% gains this year amid a wireless usage explosion as well as telecoms’ growing value and dividends, I see a great opportunity for some options plays. Calls are very cheap in these cases, and small changes in the underlying stock can result in big changes in the options.

Get into the T Oct $38 calls to start. Buy under 39 cents for a target of 89 cents.

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