Buyer increases wager on MGM

Mike Yamamoto (
December 26, 2013

MGM Resorts attracted bullish option activity on Tuesday for the second session in a row.

A trader sold 5,000 January 21 calls for the bid price of $2.19 and, at the same time, purchased 7,500 January 23 calls for the ask price of $0.73, according to optionMONSTER's Heat Seeker tracking system. The lower-strike calls were below previous open interest, indicating that an existing long position was closed and then rolled higher by $2 while increased in size.

The new long calls lock in a $23 purchase price for the stock for the next month no matter how far it might climb. The contracts could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below that strike price through mid-January. (See our Education section)

On Monday our systems identified another MGM call roll in the March contracts.

MGM rose 0.92 percent on Tuesday to close at $23.08. Shares of the Las Vegas-based company have been on a scorching run higher since bouncing off support at the $18.50 level a month ago. Casino operators as a group are up more than 90 percent this year, as shown on the screen shot below from our researchLAB analysis tool.

Total option volume in the name was nearly 50 percent higher than its daily average for the last month. Overall calls outnumbered puts by 9 to 1, a reflection of the session's bullish bias.

(Graphic courtesy of researchLAB )

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