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The New York Times building in New York City.

AP Photo/Mark Lennihan

Shares of New York Times Co rallied more than 9 per cent Monday, making it one of the biggest gainers on the New York Stock Exchange, after a UBS note citing advertising growth at the newspaper.

The stock rose to a two-month high of $8.77 (U.S.) before trading up 63 cents, or 7.9 per cent, at $8.65.

UBS analyst John Janedis wrote a media note on Monday saying that the number of ads in the newspaper is up 4 per cent so far in October compared with the same period last year.

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A New York Times representative was not immediately available for comment.

Option volume on the stock was heavy and above its average daily turnover, led by the trading of bearish put options, which give the right to sell the stock at a preset price up to a certain date.

In all, about 22,000 puts and 902 calls traded in New York Times stock by 2:55 p.m. EDT, according to option analytics firm Trade Alert. The put volume, mostly in the April $7 line, was aggressive, and surpassed its average of about 69 put contracts per day.

Almost all of the put action occurred in the contracts granting investors the right to sell New York Times shares at $7 a piece by their April 2011 expiration.

Shares of other newspaper companies also rose. Gannett Co. advanced 2.6 per cent while McClatchy climbed 8.4 per cent.

"It's been a laggard," said Doug Arthur an analyst with Evercore Partners about the New York Times stock. "The problems in the third quarter are pretty well known. It seems like people are waiting for the paywall to be introduced in 2011."

Mr. Arthur has an "overweight" rating on the stock with an $11 price target.

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Last month, the New York Times said third-quarter revenue would fall more severely than expected, because of declines in advertising and circulation.

"I think newspaper stocks are catching up to the market," said Edward Atorino, an analyst with the Benchmark Co.

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