R.R. Donnelley Gets Vote of Confidence

May.12.11 | About: R.R. Donnelley (RRD)

By David Russell

R.R. Donnelley (NASDAQ:RRD) has spurted higher this week, and one investor apparently thinks that the stock will hold its ground.

optionMONSTER's tracking systems detected the sale of 32,500 September 20 puts for $1.15 against open interest of just 40 contracts. The transaction indicates a willingness to own shares in the printing company at the strike price and reflects a belief that they'll remain above $19 or rally higher. Investors often sell puts on companies they like but don't want to expend capital to buy shares.

RRD fell 1.07 percent to $20.25 in late morning trading but is up more than 20 percent in the last six months. It reported worse-than-expected earnings on May 4 but also announced a $1 share buyback.

The shares remained around $19 until Monday, when they made a sudden push through $20. It isn't clear what caused the move, but it came after RRD found support at its 50-day moving average and then its 30-day moving average.

While traditional printing has been in decline for years, the company has been expanding into services such as layout and document distribution while growing overseas. International revenues grew 11 percent last quarter, almost twice as fast as the U.S. market.

Overall option volume in the name is more than 70 times greater than average so far today.