Boyd Gaming Corp. (NYSE: BYD )
are deep in the red on Tuesday following the casino company's
worse-than-expected earnings announcement ahead of the opening
bell. Options action on the tape during today's session suggests
one investor could have closed a bearish put position on a bet that
the stock will not drop much further during the long term.
At 10:57 a.m. EDT, two blocks of 3,500 BYD January 2012 5 puts
changed hands for an average premium of roughly 92 cents per
contract. We currently see 7,126 of these out-of-the-money puts on
the tape versus current open interest of 18,500 contracts. A look
at time and sales shows the investor sold these puts and collected
roughly 92 cents per contract. Judging from the open interest
level, the investor most likely sold to close out a bearish
position in BYD.
The investor who sold these puts could have taken a slight
profit or loss depending on the original premium paid for the
position. In addition, the investor also sold roughly 105,000
shares for $8.40 per share. Tying a stock position to the options
action suggests the investor could still be interested in betting
that volatility will come in during the long term.
BYD shares dropped more than 5%, or 49 cents, to $8.52 during
morning trading. Earlier during today's session, BYD shares were
down more than 7%. The stock is trading roughly 37% lower than its
52-week high of $14.85. BYD announced earnings of five cents per
share and missed estimates by five cents.