Put surge in MGM may not be bearish


A big put trade tops the option activity in MGM Resorts, but it may not have bearish implications.

MGM is up fractionally this morning to $13.68 after falling sharply from the highs of last week. The casino operator's shares have been trying to break through resistance at $15 for the last couple of months but remain in an uptrend from support at $9 since December.

More than 15,000 MGM options have traded so far this morning, about twice the daily average. The vast majority of the options is in puts, most of them in one spread.

optionMONSTER's Depth Charge system detected the purchase of 6,988 April 15 puts for the ask price of $1.41 against open interest of 11,228 contracts. At the same time, the trader sold the same number of May 15 puts for the bid price of $1.62. The previous open interest at that strike was 2,747, so that was a new opening position.

The trader appears to be rolling a short-put position from April to May, ending up with a bet that  the stock will be above $15 at expiration. This could also be a short calendar spread , which would be designed to profit from a big move in MGM in the near term and/or a difference in the implied volatility in the option prices. (See our Education section)

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