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Long-term wager calls for MGM rally

MGM Resorts has been pulling back after a rally, and one investor is placing a long-term bet on the casino stock.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 10,000 January 2015 15 calls for $1.60. An equal number of January 2015 10 puts were sold at the same time for $1.35.

The trade is similar to owning MGM shares because the long calls will appreciate in the event of a rally and the puts sold short will dwindle. The opposite will happen to the downside. The benefit of the strategy is its low cost of just $0.25. It also programs a buy order for $10 if the stock falls to that level. (See our Education section for more on how options can be used to manage trades.)

MGM is up 1.15 percent to $12.23 in afternoon trading. It surged more than 40 percent between mid-November and mid-February and is now trying to stabilize after retreating to $12.

Total option volume is twice the daily average in the name so far today, according to the Heat Seeker.

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.


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

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