Crown Castle Won’t Drop Your Calls

by John Kmiecik | November 12, 2012 8:43 am

With all the fear and worries about where the domestic and global economies are headed, investors are having a hard time trying to make heads or tails out of this fiscal cliff situation. Questions about what to do with money and investments will become even more rampant now, it seems.

This is a time when people want things that are strong, reliable and have a proven track record before they invest their hard-earned money. Here is a trade idea on a company that has all three — and looks to keep getting stronger:

Crown Castle International Corp. (NYSE:CCI — $66.83): Long Calls

The trade: Buy the December 65 calls for $3.30 or less.

The strategy: The long call is one of the most basic strategies in options trading and is used for a bullish outlook on a stock. The trade can profit if the stock rises and the call premium increases to an amount more than was paid. Maximum profit is unlimited because CCI can continue to rise, and the maximum loss is $3.30 if CCI finishes below $65 at December expiration. Breakeven is $68.30 at expiration based on a cost of $3.30.

The rationale: CCI announced earnings just a couple of weeks ago. “We had an excellent third quarter,” President and CEO Ben Moreland said. Crown Castle said that all four major wireless carriers are actively engaging in upgrading their networks. This, of course, is good news — especially if you are a company that operates and leases towers for wireless communications like CCI does.

But let’s really take a look at where this trade idea is derived from.

Click to Enlarge
Take a look at a one-year chart, and you will see an amazing uptrend with higher pivot highs and higher pivot lows constantly being made with a few exceptions. The stock has moved from about $40 to where it is currently trading over that time period.

A trader would be hard-pressed to find a chart with a bullish trend as nice as CCI over the last year. Even with last week’s selloff, Crown Castle hardly faded, which is a possible show of strength to the upside. If CCI can move through an area just below $68 — where it has encountered some resistance in the past — you might need your wireless phone to brag about how much money you’ve made!

As of this writing, John Kmiecik did not hold a position in any of the aforementioned securities.

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