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November 8, 2012  Thu 12:20 PM CT

One investor is hoping for fireworks when International Game Technology reports earnings tonight.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 7,000 November 13 calls, most of which priced for $0.40, against open interest of 1,877 contracts. The trade dominated activity in the company, which makes casino-game machines.

IGT is off 0.7 percent to $12.80 in afternoon trading and has lost more than one-quarter of its value since the beginning of the year. The shares gapped lower after its last earnings report in August, when weak demand caused profit and revenue to miss forecasts.

Buying calls before today's report lets the investor significantly mitigate the risk of another poor set of numbers while providing exposure to potential upside. For instance, today's position represents the equivalent of about 700,000 shares, but at less than 4 percent of the cost.

The position will profit if IGT beats expectations and rallies. But if it drops, the trader will lose only the $0.40 paid for those calls. (See our Education section for more on how trading options can be safer than trading shares.)

More than 10,000 contracts have traded in the name so far today, with calls outnumbering puts by about 3 to 1.
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