How the bulls are leveraging Lamar
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of 4,100 July 48 calls for $3.05. Blocks of 2,050 contracts each were sold in the July 50 calls for $1.90 and the July 55 calls for $0.50. Volume was more than 75 times open interest at all three strikes.
The trade cost $758,500 to open and is highly leveraged to upside in the billboard owner. It will break even if LAMR goes over $49.85 and earn a maximum profit of 143 percent on a move to $55. While unusual on its surface, the strategy essentially consisted of two bullish call spreads, one between the 48 and 50 strikes and the other between 48 and 55. (See our Education Section for more.)
LAMR rose 0.73 percent to $47.99 in late morning trading, and is up 24 percent so far this year. The shares have been rising as an improving economy draws money into media names. It's probably also gotten a boost from CBS's decision to shift its billboards into a real-estate investment trust. Other companies have gained on such moves, which eliminate corporate income tax.
LAMR also peaked around $55 in mid-2007, and today's spread is apparently looking for a move to that level.
Total option volume is 9 times greater than average in the session, according to Heat Seeker. Calls outnumbered puts by a bullish 45-to-1 ratio.