Lamar Advertising (LAMR) PriceWatch Alert Targets 37.07% Downside Protection

Posted: Friday, May 08, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Lamar Advertising (NasdaqNM: LAMR) closed yesterday at $22.12. So far the stock has hit a 52-week low of $5.35 and 52-week high of $41.99. Lamar Advertising stock has been showing support around 17.09 and resistance in the 25.49 range. Technical indicators for the stock are Bullish and S&P gives LAMR a neutral 3 STAR (out of 5) hold rating. LAMR appears on the Investors Observer Stocks In The News list. LAMR posted a first-quarter loss Thursday of $21.42 million or 23 cents per share, during the first quarter. Analysts had expected the company to lose 28 cents per share. For a hedged play on this stock, look at an Oct '09 15 covered call (LJQ JC) for a net debit in the $13.92 area. That is also the break even stock price for this trade. This covered call has a 162 day duration, provides 37.07% downside protection and a 7.76% assigned return rate for a 17.48% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the LAMR Jan '10 10 Call (YZM AB) and selling the Oct '09 15 call (LJQ JC) for a $4.45 debit. The trade has a 162 day life and would provide 34.67% downside protection and a 12.36% assigned return rate for a 28.00% annualized return rate (for comparison purposes only). Lamar Advertising does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]