How large trader is managing Lamar


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Lamar Advertising has been steadily climbing, and traders are using options to manage the move.

Our tracking programs detected the purchase of 6,982 January 45 calls for $6 and the sale of an equal number of April 49 calls for $3.80. Volume was below open interest in the January contracts, which indicates that an existing short position was closed and rolled forward in time.

The investor probably owns shares in the billboard company and had sold the contracts as part of a covered-call strategy . He or she now stands to collect an addition $4 on their stock, and paid $2.20 to make the adjustment. Using in-the-money strikes results in a highly conservative position that earns money from the passage of time rather than a strong directional move. (See our Education section)

LAMR is up 1.22 percent to $50.60 and is up almost 31 percent this year. The stock is now back to the same area where it traded in the second half of 2007 before collapsing along with the broader market. That could make some traders think that it will advance slowly, helping to explain the use of a covered call.

Total option volume is 5 times greater than average in the name so far today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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