Bearish Option Trades in MGM Resorts International (MGM) and Boyd Gaming (BYD)
It seems some traders are expecting bad things in the casino sector, as they double down on puts in two big names this morning. The first put buy was seen in MGM Resorts International (MGM), and that was followed by a put buy in Boyd Gaming Corporation (BYD).
One trader bought 10,000 January 2016 $17 Puts in MGM Resorts International (MGM) in late morning trading today. Almost all of those were bought at the ask of 70 cents. This opening Putl buy in this hospitality and casino company had a transaction value of over $700,000. A nice sized bet, and not the only one in this sector?
MGM Resorts International (MGM) is currently trading at $24.75 down 12 cents, on lighter than average volume. It is well off its intraday high of $24.92. MGM has a 52 week high of $28.75, and a low of $17.30 on the year. That’s quite a large trading range, so this stock is no stranger to volatility and this trader thinks it may break below it’s 52 week low.
While this looks like a very long term bet, we’re guessing this trader expects a short term catalyst to drop the price substantially in the near term. It could be that numbers have leaked on Q3 earnings, which are not due to be reported until October 29.
The second big put buy in the casino sector was seen in Boyd Gaming Corporation (BYD). This one is no stranger to unusual options buys, though the last one was a call buy, that definitely didn’t work out for us. Today, a trader bought 10,000 January 2016 $8 puts in BYD. They paid 95 cents for these puts. We’re not a big believer in coincidence when it comes to large unusual options trades, so we find it interesting that the same expirations were bought in these two different companies in the same sector.
Boyd Gaming Corporation (BYD) is currently trading at $10.66 today, down 38 cents so far, on light volume of around 175,000 shares. This is a big put buy for a stock that only trades an average of 1.25 million shares per day. BYD has a 52 week high of $14.75, and a low of $9.11 on the year. That’s a pretty large trading range, and it’s got a ways to go to $8.00
Like the MGM trade, we don’t expect this long term option buy to take long to pay off for this trader. They (or the same person?) expect the casino market to take a hit in some way in the nearer future.
We personally aren’t playing any puts at this time, but these two large bearish put bets in MGM Resorts and in Boyd Gaming (BYD) are certainly very unusual.
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