If you need some electronic communication equipment, then Comtech is the company to go to. They specialize in satellite earth station modems, over-the-horizon modems and gateways. Comtech also specializes in aviation communication products and broadband RF amplifiers.
Comtech’s stock price took a big haircut in March following its quarterly earnings report. Comtech’s forward outlook was negative and its stock price reacted accordingly.
Comtech’s October, November and January call options with a 35 strike were experiencing significant stock option volume yesterday. The put option volume appeared normal, so yesterday’s heavy call option action had a bullish bias.
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The Strike of Pain for Comtech for November expiration is at the 35 strike price which is above the current stock price and also points to a bullish bias for the stock. The Strike of Pain represents the strike where the options buyers will lose the most money and the option sellers will gain the most money at expiration.
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Comtech’s next earnings report isn’t anytime soon and there isn’t much news related to the company. The company has been receiving quite a few orders for its products of late, but not enough to warrant the high call option volume. Maybe one of the big military contractors is considering acquiring Comtech. Comtech would make a nice addition to L-3 Communications (LLL). Honeywell (HON), Lockheed Martin (LMT) or Raytheon (RTN) might also be on the prowl.
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A covered call investing position for Comtech for the December 35 call option is attractive with a %if unchanged potential return of 4.3%. This return could be realized in only 60 days. The call option to sell for this position would be the December 35 call option with ticker symbol CQHLG.
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[tags] electronic communication equipment, satellite, earth station, modems, over-the-horizon, gateways, aviation, RF amplifiers, earnings report, Strike of Pain, CMTL, Comtech Telecom. Corp., HON, Honeywell Inc., LLL, L-3 Communications Inc., LMT, Lockheed Martin Corp., QCOM, QualComm Inc., RTN, Raytheon Co., VSAT, ViaSat Inc. [/tags]