Bull rolls the dice on Pinnacle

By David Russell,

Shutterstock photo

Pinnacle Entertainment has pulled back hard, but at least one bull is stepping into the name ahead of quarterly results next week.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 1,300 February 21 calls for $1.10 to $1.34 today. Volume is more than 100 times previous open interest, which indicates that new positions were initiated.

The investor now has the right to buy shares in the casino operator for $21 in the next 2-1/2 weeks no matter how high it might trade in that time. The contracts provide cheap upside exposure, limiting the amount of capital at risk if shares fall. (See our Education section)

PNK is up 4.19 percent to $21.65 in afternoon trading but is down almost 17 percent so far this year. Shares are attempting to hold support around the same level where they peaked in May and July, which could make some chart watchers expect a bounce.

Today's trader is probably looking for a rally with earnings coming out next Wednesday, Feb. 12. The last report missed expectations, but the stock rallied because management cut costs following the acquisition of Ameristar.

Total option volume is more than triple the daily average so far in the session, according to the Heat Seeker. There was also heavy selling in the March 23 puts for $2, however volume was below open interest in those.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: PNK

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