Wednesday, April 04, 2007

My Notebook-Advertising

I'm going to preface this post with a qualifier that I'm generally insanely early with my thoughts--which generally means that I get it wrong. Nevertheless, I'll post this.

One area that really takes it on the chin in a slowdown is advertising. A couple of weeks ago, I had Lamar Outdoor Advertising as a possible short. I bought some July 65 puts today. (It is currently trading at $63 and some change--small change, less than a dime.)

I was prompted to take this position because Monster reported slower growth in its advertising business. Also, I've noted that there are a few prime billboards (oh how I hate billboards) that are vacant that belong to Lamar. I'm no technician, but it looks like LAMR is trading at the upper end of its channel. I really do not see much upside catalyst for this stock, though they do have a monster buyback program. I'll admit that I'm a contrarian indicator--so they may end up doing quite well!

(CTML)

4 comments:

joey said...

I appreciate your post, Leisa.

I just pulled a Stockcharts P & F for Lamr: a 3 box reversal...bearish price objective $52.00!

the question, now, have you enough time for your idea to work?

why did you select this strike price? this expiration month?

just learning here...appreciating your sharing...

Leisa said...

J-

I've not found P&F charts easy to work with.

Regarding the time--well, I certainly hope July is enough time for the idea to work! When the economy slows, advertising slows--as I remember well from my agency days. I selected an in the money put rather than something further down the price chain.

Please don't take any lessons from me on options. I swore them off, but I'm selectively entering a few.

joey said...

recognizing that you have more experience/knowledge/insight than I about advertising and business cycles, I found your idea interesting...
as for your options trading, you're obviously into it; hence, have war stories and are learning lessons...so, just wondering if you're developing workable strategies or precautions that you'd care to share...do you use specialty sites or software for pricing?
I just started buying/selling options last year and I'm learning...
this particular trade...what you say makes sense; but in my limited experience, I'm finding that 'fundamentally' obvious positions sometimes don't unfold within an 'appropriate' time frame...I've taken a few hits for being early...eg., right now - since Jan 03, I am short JAS; and that irredeemable house of cloth keeps going up... starting to hurt a little... a put wouldn't have worked unless I were nimble...
anyway, much interest here...with a comfort level about asking you, as you appear to me to be honest and approachable and the moon approves.

regards again.

joey

Leisa said...

"I'm finding that 'fundamentally' obvious positions sometimes don't unfold within an 'appropriate' time frame."

Remember, I'm in no position to give advice. But movement in the right direction and the right time frame can be the problem. From my experience--take reasonable positions and be prepared to not jump off a ledge if you lose it all--these positions can move against you quickly. Take your profits quickly. I've turned winning positions into losing positions.

I'm still expecting a market correction....we'll see.

Good luck with your positions.