Boyd Gaming reports earnings tomorrow morning, and one bear is
upping the ante.
Our Depth Charge tracking program detected activity in the May 10
puts, where 3,000 contracts changed hands for $0.95 and the June 10
puts, where 4,400 contracts went off for $1.25. It appears the May
10s were sold and the June 10s were purchased.
This suggests that an investor rolled a position from one month to
the next and increased its size. The trade cost a net $265,000 and
increased downside exposure because the position has more time for
a move and more contracts. The strategy is also interesting because
it uses in-the-money options, which increases leverage to small
moves. (See our Education section)
BYD rose 0.89 percent to $9.02 in early afternoon trading. The Las
Vegas-based casino operator has struggled because of its
concentration in the U.S. and its lack of exposure to
faster-growing markets such as Macau. It's down 19 percent in the
last three months, in contrast with a 41 percent gain for Asian
upstart Melco Crown Entertainment.
BYD's reported a wider-than-expected loss and weaker-than-expected
revenue on March 1. The shares have been attempting to hold support
around $9 and had significant short interest at 29 percent of the
float in mid-April.
Overall option volume in the stock is 6 times greater than average
so far today, with puts outnumbering calls by 8 to 1, according to
the Depth Charge.
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