http://www.options-trading-education.com/ - Newspaper Stock Options
The recent buzz about the Washington Post - WPO becoming profitable brings to mind the subject of newspaper stock options. How to trade stock options on newspapers is really no different than trading options on other stocks. It simply requires a close look at company fundamentals and, often, a closer look at the technicals of stock pricing in today's chaotic markets.
A couple of examples and comparisons may come in handy when trading newspaper stock options. We look briefly at the Post, The News York Times Company - NYT, and The Wall Street Journal's owner News Corp -- NWS. The Times is slowly raising digital revenues. The Post is more widely diversified than many potential options traders may realize, and the Wall Street Journal is owned by the world's second largest media conglomerate, News Corp.
As options traders seek to anticipate stock price movement they will need to anticipate the fates of newspapers alone and in conjunction with other news sources and educational endeavors in order to profitably trade newspaper stock options.
In trading newspaper stock options on the Washington Post traders should realize that the company is diversified into educational products and media sources across the globe. From professional training and English language programming to colleges with stable faculty and curricula the Post is set to profit from a range of services far and beyond its original status as the major newspaper of the nation's capital.
For those interested in stock options trading of WPO stock, there are two questions. Can this dividend paying stock reverse its losses of the last few years and provide the nearly 30% per year annual return expected by some analysts. And if WPO does rally how soon will stock prices and options prices reflect the change in fortune of the Washington Post?
We offer two comparisons to the Washington Post. The New York Times, like the Post, is a venerable newspaper. The New York Times Company - NYT, was trading at nearly $45 a share ten years ago.
Today it trades around $7 a share. What many consider the world's finest and most authoritative newspaper has fallen prey to the electronic age. Too many people watch TV and, especially, use the internet for their news. The paper that puts out "all the news that's fit to print" has seen falling sales.
The Times does not pay a dividend, has a thirty fold debt to asset ratio, and a minus 47 percent return on equity. In 2010 the Times reported that its "digital revenues" had grown to 15% of total income.
Options traders can possibly profit from either a bearish or bullish stance on this stock depending upon the ability of the Times to diversify, contain costs, and generate more profits.
The other comparison is News Corp which in early 2009 NWS traded in the $6 range and now trades around $15 a share. News Corp is a good example of how a newspaper chain or media conglomerate can be more profitable than a single paper.
The same content can be developed and written for a lead paper such as the Wall Street Journal, or the Times, or the Post, and then recycled at little extra cost throughout the chain of papers, TV stations, radio stations, and internet outlets.
As always we are not suggesting that trading stock options on these companies will be profitable. Rather we offer this discussion of newspaper stock options as an example of working through the opportunities available in options trading.
As a matter of perspective here are some recent circulation figures rounded to the nearest 100,000 subscribers.
1. Wall Street Journal - 2,100,000
2. USA Today - 1,800,000
3. New York Times - 900,000
4. Los Angeles Times - 600,000
5. San Jose Mercury News - 600,000
6. Washington Post - 600,000
7. New York Daily News - 500,000
8. New York Post - 500,000
9. Chicago Tribune - 400,000
10. Chicago Sun-Times - 400,000
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