Options Trader Bets Gannett Will Drop

OptionMonster co-founder Pete Najarian provides options picks Monday, Wednesday and Friday in TheStreet.com's Deep in the Money Calls newsletter.

David Russell, reporter for OptionMonster.

MCLEAN, Va. (TheStreet) -- Gannett(GCI Quote) has been running out of gas since rallying in July, and now at least one bear expects the newspaper stock to decline further over the next six weeks.

OptionMonster's tracking systems detected unusual activity in the October 7.50 puts, which traded 7,750 times against open interest of 5,938 contracts. A series of simultaneous trades at 75 cents accounted for almost all the activity in the strike, suggesting a purchase by a large institutional investor.

Gannett, which is up 1.13% to $8.04 in midday trading, has fallen 12% in the last five sessions after a 96% gain during July. Gannett reported a better-than-expected second-quarter profit on July 15 but mainly because of cost cutting.

The stock needs to decline about 16% by the October expiration for today's puts to turn a profit. Gannett fell on heavy volume in the seconds following the options trade, suggesting the dealer sold the stock to hedge long exposure to the name after selling the puts.

Puts in Gannett outnumbered calls by more than 250 to 1, reflecting the bearish sentiment in the name. On a day when overall volume in the options market is less than half the average level, activity in Gannett is almost twice its typical level.

-- Reported by David Russell of OptionMonster in New York.

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