Gannett is bouncing after a steady decline, and one investor is
making a low-cost upside bet.
optionMONSTER's Heat Seeker tracking system detected the
purchase of 10,650 October 16 calls for $0.10 and the sale of an
equal number of October 10 puts for $0.10. Volume was more than 4
times open interest in both strikes.
The strategy let the investor pay no money, aside from
commissions, to wager on a rally in the beaten down newspaper
stock. If GCI closes above $16 on expiration, he or she will make
money. They'll lose money below $10 and walk away with nothing
between those two levels.
The stock rose 4.23 percent to $13.30 yesterday and is up
about 8 percent since bottoming out at a nine-month low of $11.66
on Aug. 24. It entered today's session down 30 percent from its
peak in late April.
The publisher of USA Today reported earnings at the high end of
expectations on July 17 amid weak revenue. However, there have been
signs that the worst of the slump is over in the newspaper
industry, and advertising stocks such as Interpublic Group have
been showing strength.
Short interest represented an elevated 14 percent of GCI's float
in mid-August, which could trigger forced buying if the shares
begin to recover.
Overall options volume in the stock 12 times greater than
average so far today.
(Chart courtesy of tradeMONSTER)
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