Yesterday’s Unusual Options: Calpine Corporation (CPN), Applied Materials (AMAT), International Game Technology (IGT)

Even in a broad market downturn yesterday, there were some unusual and large call option trades in a few companies, which would be worth watching this morning.  These unusual options trades involved: Calpine Corporation (CPN), Applied Materials (AMAT), and International Game Technology (IGT).


Calpine Corporation (CPN)

There was a large trader amping up his holdings in Calpine Corp yesterday afternoon, buying 3306 January $20 calls at the ask price of $3.70.  That trade alone was worth $1,223,000, but the wasn’t the only one.  There was another big trade in the Jan $21 calls after that first one.  A trader bought 2,740 of the January $21 calls all at the ask as well.

Based on those two rather large call buys I think we can definitely expect some major news from the company, or an analyst upgrade and price target raise, or even some great earnings numbers on August 1.

We don’t know which but we’ll know when it happens, and we are locked and loaded with a copycat trade.  Calpine Corp (CPN) finished the day at $23.81 yesterday.


Applied Materials (AMAT)

One large player sold his 10,000 Jan $20 calls in AMAT for $3.70, and bought almost 8,000 of the January $25 calls for around $1.17.  That makes for a bet of just under one million dollars.
AMAT had a less than stellar day, but not out of line with the rest of the market.  This makes it a good time to copy the smart money and grab some of the January $25 calls this trader bought.  Of course, we need a new catalyst as the JPMorgan upgrade and price target raise announced yesterday morning didn’t drive the price higher….yet.  The firm raised their price target from just $19.00 to $30, with an overweight rating.
Yesterday’s big call buy makes us think there may be another big upgrade coming today or tomorrow.  Applied Materials (AMAT) closed yesterday at $22.74.

International Game Technology (IGT)

IGT-logo-2IGT had some action recently, and yesterday got another big bullish bet, selling a staggering 107,728 August $13.00 puts, 80% of them sold at the bid.  This big trade was worth about $2,154,000.  This trader seems rather committed to the idea that IGT will not be trading lower in the next month and a bit.

The company announces earnings on July 21, and it could have leaked that they are looking good.  Another, usual possibility is that a large upgrade is coming down the pipes.  We’ll see soon enough.  And we like this trade, so we are are along for the ride.

International Game Technology (IGT) closed yesterday at $15.20 and is currently up 10 cents in premarket trading