Back to Main

Trader sees Lamar staying sideways

By: optionMONSTER
Posted: 10/26/2012 4:29:00 AM
Referenced Stocks: LAMR

One trader expects a non-event when Lamar Advertising reports earnings two weeks from now.

optionMONSTER's tracking systems detected the sale of 2,500 December 39 puts for $1.95 and 2,500 December 40 calls for $1.85. Volume was more than 200 times open interest at both strikes, indicating that a new position was initiated.

It generated a credit of $3.80, which will be the trader's maximum profit if the billboard owner closes between $39 and $40 on expiration. Gains erode outside of that range, turning to losses below $35.20 and above $43.80.

LAMR fell 0.23 percent to $39.23 yesterday and has been moving sideways for the last two weeks. Option premiums have been rising for the last month as investors brace for the results, which will be released before the open on Nov. 7.

By selling calls and puts, yesterday's trader took the other side of the market and is betting that the numbers will be a non-event. If they're right, the contracts will lose value and their position will gain. (See our Education section)

The trade, known as a short strangle , pushed overall option volume in LAMR to about twice the daily average.