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Call sellers turn tables on Valassis

Valassis Communications broke hearts last earnings season, and now love has turned to scorn.

The company offers old-fashioned advertising services such as mailers and newspaper inserts, and it is starting to expand into the digital arena. The stock enjoyed a meteoric rally in 2009 and 2010, during which there was frequent put selling as investors speculated that it was on solid ground.

Now the tables are turned and traders are writing calls, betting that the upside is limited. About 2,900 September 25s were sold today for $1.60 and $1.55 against open interest of just 144 contracts.

VCI is up 0.4 percent to $25.40 in afternoon trading but still down 22 percent this year. The stock, which touched an 18-month low of $21.50 earlier this month, appears to be rolling over around the same $26 level where it bounced in April. This suggests that support is resistance as buyers become sellers.

The last earnings report on July 28 missed expectations, with revenue especially weak. Guidance for the full-year was also below consensus.

Today's call sellers are essentially expressing a view that VCI will stay below about $26.55-$26.60 through expiration.

Overall option volume is triple the average amount.

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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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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