Bulls flush with gains in $IGT calls

International Gaming Technology (IGT) is dealing a winning hand to upside option traders today.

On Oct. 29, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,200 November $10 calls expiring today for $0.20 with shares at $8.24. This was clearly fresh buying, as open interest in the strike was only 304 contracts before that session began.

Those calls sold for $3.00 today, 15 times their purchase price. The stock rose 58.01% in the same time frame, an impressive gain but nowhere near that of its options.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

IGT was last up 2.92% to $13.03 today. The U.K.-based manufacturer of casino-gaming technologies was upgraded to Neutral from Underperform with a $14 price target at Credit Suisse yesterday.