International Gaming Technology dealt a winning hand to upside option traders
On Oct. 10, Investitute’s market scanners identified the purchase of 5,000 November $25 calls for $1.15 and $1.20 as part of a bullish roll with shares at $24.11.This was clearly a new position, as open interest in the strike was 2,931 contracts before the trade occurred.
Those calls sold for $2.53 today, more than double their purchase prices. The stock rose 13.9 percent in the same time frame, an impressive gain but nowhere near that of its options.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
IGT soared 15.09 percent to $27.45 today. The U.K.-based manufacturer of casino-gaming technologies easily surpassed earnings expectations this morning.