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Read All About It: Options Traders Think Newspaper Stocks Are Cheap

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James McHuff
Newspapers

Do options traders think newspaper stocks are cheap?

If today's activity is any indication, the answer is yes.

The AOL - Huffington Post merger sent shares of left-for-dead newspaper stocks sharply higher today, and it sent options traders into a veritable tizzy.

“It’s a game changer and bullish news for a name like the New York Times," said Options Action contributor Scott Nations.

Call volume on the Gray Lady was six-times its daily average volume.

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In rival Gannett, investors bought over 8000 contracts of the July 20-strike calls, a bet that doesn't payoff unless Gannet stock trades above $20.95 by July expiration, or 22% higher than today's closing price.

Still, some investors remain unimpressed with the sector.

“At the end of the day, three quarters of The New York times revenue comes from newspapers, which is a declining industry," said Morningstar analyst Jocelyn Mackay.

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