Option volume has ramped up today on KeyCorp (KEY), with activity rising well beyond the usual level on both the call and put side of the tape. Taking a closer look at some of the major block trades on this regional banking issue, it appears that a single spread strategist is responsible for a healthy portion of this option volume.

Specifically, the trader purchased a block of 10,000 June 10 calls for $0.50 each, and simultaneously sold 10,000 June 8 puts for $0.25 each. The result was a net debit of $0.25 per pair of contracts -- which means the speculator can begin collecting profits on those purchased calls if KEY rallies beyond $10.25 by June expiration.

Minyanville's top dog, Todd Harrison, dares to ask in public what Wall Street types quietly consider in private. For more insight and ideas, visit www.Minyanville.com.

Yikes, Lehman downgrades Scripps (NYSE: SNI), Gannett (NYSE: GCI) pooped the bed. What the heck is happening to these paltry little rags?

Some thoughts:

• The internet is the single biggest deflationary force ever invented and the "information deflation" is in full force.
  
• Without a doubt, my bullish bent on the newspaper names was my single worst "call" of the year.
  
• The thesis was that portals will buy the papers to feed content into their pipes.
  
• That remains a viable option for some of the franchise properties, although it will seemingly happen -- if it happens -- from lower levels.
  
• I still own some GCI January calls but have quickly become lottery tickets.

R.P.

Position In GCI