OptionsHouse

Options Trading News

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.
Share this article with your friends


Invest Like a Monster - San Diego: June 26-27

Premium Services

Education & Strategy

Investor deficiency in premium collection

Most investors have heard about selling options as a form of income generation. You hear it from brokers and financial advisors as a way to generate income without selling off pieces of your nest egg, dwindling through your retirement accounts, and then being stuck figuring out how to financially afford the rest of your life...

View more education articles »