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January 22, 2013  Tue 11:37 AM CT

PENN: SEE CHART GET CHAIN FIND STRATEGIES
Penn National Gaming has been losing some ground in recent weeks, but a large trade is betting that further downside will be limited.

More than 5,100 PENN options have traded so far today, far above its average daily volume of 130 in the last month. optionMONSTER systems show that almost all of that volume is in the February 46 puts.

A trader sold 5,000 of those contracts, dominated by a big block of 4,825 that went for $0.35 on a wide bid/ask spread. Open interest in the strike was just 12 contracts at the beginning of the session, so today's trade is clearly a new position.

The put selling is a bet that PENN will remain above $46 in the next three weeks. The trader collects the risk premium in exchange for the possibility of having to buy the stock if it is below that strike price. (See our Education section)

PENN is off fractionally at $48.80 this afternoon. The pari-mutuel gaming company has been pulling back in the last couple of weeks after trading above $51. Shares have held above $46 since gapping up from $37 in mid-November.
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