Trade of the Day: Frontier Communications (FTR)

We are looking for the stock to drop and challenge its previous low just above $6

By John Jagerson and Wade Hansen, Editors, SlingShot Trader

To receive further updates on this Frontier Communications (NASDAQ:FTR) trade as well as an alert when it’s time to take profits, sign up for SlingShot Trader today and take advantage of our limited-time $19 for 2 months Holiday Savings Special

Today, we’re opening a new bearish trade on Frontier Communications (NASDAQ:FTR).

Leading up to the passage of the Republican tax bill, investors started to punish companies with lower corporate debt ratings, as these companies will no longer be able to fully deduct the higher interest payments they make on their high-yield bonds.

This puts FTR, which recently had its credit rating downgraded once again, this time by Moody’s, in a difficult situation because the company is going to not only lose the benefits of its substantial tax deductions but also continue to struggle against its larger, investment-grade competitors.

FTR has been struggling for nearly two years as its stock has plunged from highs just below $88 to its current price just below $7.50, and we don’t think the company’s struggles are over. Wireline telecom providers are facing an uphill battle against bigger companies like Comcast (NASDAQ:CMCSA), as their legacy services continue to dwindle as more consumers switch to high-speed Internet and cable providers with more capacity.

We are looking for the stock to drop and challenge its previous low just above $6.

‘Buy to open’ the FTR February (2018) 7 Put (FTR180216P00007000) for a maximum price of $0.90.

Follow our Facebook page to receive each Trade of the Day direct to your News Feed — and join the conversation.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade with our $19 for 2 months Holiday Savings Special by clicking here.

Article printed from InvestorPlace Media,

©2018 InvestorPlace Media, LLC