Learn the trade here. Make it on tradeMONSTER

Options Trading News

September 20, 2013  Fri 11:38 AM CT

MGM: SEE CHART GET CHAIN FIND STRATEGIES
MGM Resorts has climbed to five-year highs, and one large trader is selling long-term puts in the casino operator.

The big action was in the January 2015 20 strike, where 7,500 puts were sold them for the bid price of $3.20, according to optionMONSTER tracking systems. The volume was more than double the strike's previous open interest of 3,078 contracts, clearly showing that today's trade is a new position.

The put seller will keep the $3.20 credit as profit if MGM holds above $20 through the next 15 months. If it falls below that level, he or she will face the obligation to buy shares at an effective price of $16.80 when that credit is included. Traders sometimes sell puts in the hope that the stock will pull back so that they can purchase shares at a discount in this way. (See our Education section)

MGM is down 0.64 percent to $20.05 in early afternoon trading. The stock closed yesterday at $20.18 and hit an intraday high of $20.30, both its highest levels since October 2008.
Share this article with your friends


Related Stories

MGM

Range-bound play targets MGM

July 3, 2014

The casino operator is within striking distance of its 52-week high and yesterday posted its highest close since early April, but one trader sees the stock trapped in a range.

Premium Services

Education & Strategy

Why traders hedge with sector ETFs

Many people who are not familiar with options think that they increase risk, but their first and primary purpose is...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER