OptionsHouse

Options Trading News

December 24, 2012  Mon 2:14 AM CT

PNK: SEE CHART GET CHAIN FIND STRATEGIES
Pinnacle Entertainment spiked higher on Friday after agreeing to buy Ameristar Casinos, and one large trader is apparently looking to protect those gains.

optionMONSTER's Depth Charge tracking system detected the purchase of 3,000 March 15 puts in less than 2 minutes on Friday, led by a block of 2,683 that went for $0.85. There was no open interest in the strike at the start of the day, so this is fresh buying.

Shares of casino operator Pinnacle soared 21.35 percent to close at $16.20 on the $869 purchase of Ameristar, which saw its stock surge more than 20 percent as well. PNK had already been trending higher since July, when rebounded from support around 52-week lows near $9.

Investors apparently believe that the ASCA acquisition will boost Pinnacle's bottom line while cutting costs. Because PNK ran so high on the news, Friday's puts were likely purchased as a protective hedge on a long position in the shares rather than making a straight bearish bet.

These options lock in the price where the stock can be sold even if it crashes, but they will expire worthless if the shares are above the $15 strike price at expiration in mid-March. (See our Education section)

Friday's trading pushed total option volume in PNK to 6,191 contracts, 91 times its daily average in the last month.
Share this article with your friends


Related Stories

PNK

Why one trader is buying Pinnacle puts

May 5, 2016

The casino operator announces quarterly results next week, and one large trade is positioning for a possible drop by autumn.

OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »