Penn National Gaming has been trending lower, and now the bears
are looking for another push to the downside.
optionMONSTER's scanning programs detected the purchase of more
than 2,200 November 39 puts, most of which were priced at $0.41 and
$0.42. The volume was 63 times the strike's open interest at the
start of the day, so this is new money being put to work.
Owning puts locks in the price where the investor can sell shares
in the little-known gaming company. If the stock tanks, those
contracts will shoot up in value and generate significant leverage
on a percentage basis. But if it doesn't fall, the long puts will
expire worthless. (See our
PENN fell 1.12 percent to $39.85 on Friday. It had been grinding
higher since late 2008 but declined between June and August--the
same time that the broader market was rallying. It then proceeded
to make a lower high below the same $44 level that was support in
the spring. That kind of price action could make some chart
watchers think that sellers are taking over.
More than 4,600 contracts traded in the session, 33 times greater
than average, according to optionMONSTER data.
(A version of this post appeared on
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