) shares are rising this morning as the U.S. Federal Communications Commission is expected to approve a measure that will ease restrictions on media ownership
. The plan would lift a ban in the twenty largest American cities restricting media outlets from owning a newspaper, and a television or radio station in the same market.If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on TRB.
After hitting a one-year low of $22.78 in August, the stock has hit a new one-year high of $33.40 today. TRB opened this morning at $33.37. So far today the stock has hit a low of $33.09 and a high of $33.40. As of 11:05, TRB is trading at $33.28, up 99 cents (3.1%). The chart for TRB looks bullish and steady, while S&P
gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a February bull-put credit spread
below the $27.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just 2 months as long as TRB is above $27.50 at February expiration. Tribune would have to fall by more than 17% before we would start to lose money.
TRB hasn't been below $27.50 since October and has shown support around $29.50 recently. This trade could be risky if the stock breaks its upward trend, but even if that happens, this position could be protected by support the stock has formed around $31 over the past week. Plus, TRB might find some support at its 200 day moving average, which is currently at $30 and rising.Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in TRB.