Options Trading News

September 20, 2013  Fri 11:38 AM CT

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


Notable option activity in equities

October 1, 2015

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.


Trader rolls dice on MGM Resorts

September 16, 2015

Casino operators have been coming to life in recent days, and a large investor is rolling a huge MGM call position to December.


Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »