Boyd (BYD) earnings miss sparks put volume


Shares of 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Options

Referenced Stocks: BYD

Karla Yeh

Karla Yeh

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