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May 29, 2013  Wed 3:47 AM CT

IGT: SEE CHART GET CHAIN FIND STRATEGIES
One investor is using options to smooth the ride in International Game Technology.

optionMONSTER's scanning programs detected the purchase of 5,260 July 18 calls for $1.20 and the sale of an equal number of October 20 calls for $0.90. Volume was below open interest in the 18s, which indicates that an existing short position was closed and rolled to the higher strike.

The trade was probably the work of an investor who owns shares in the maker of casino games and sold the options as part of a covered call strategy. Adjusting the position raised by $2 the level at which they must unload their stock and added three months to the bet, during which time they'll receive another $0.08 quarterly dividend payment. Making the move cost $0.30. (See our Education section)

IGT rose 3.07 percent to $18.81 yesterday. The company is up 36 percent in the last six months after beating analysts' estimates for two straight quarters. It's also been adding gambling apps on Facebook to diversify its traditional slot-machine business.

Total option volume was 9 times greater than average in the session, with calls accounting for more than 95 percent of the total.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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