Bulls hit jackpot as $IGT spikes higher

International Gaming Technologies saw back-to-back days of bullish option activity last week, and traders pocketed enormous profits today.

On Sept. 11, Investitute’s tracking systems detected the purchase of 4,200 October $22.50 calls for $0.23 to $0.35, followed the next day by 6,000 more of the options bought up to $0.50 with shares at $20.87. Volume was well above open interest in both sessions, showing that this was fresh buying.

Those calls sold for $2.10 today, more than nine times its original price. The stock rallied 16.3 percent in the same time period, a significant move but nowhere near that of its options. It was the second winning call trade in the name since the beginning of August.

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 jumped 6.37 percent to $23.88 today. The manufacturer of casino-game technologies was upgraded this morning to “buy” from “neutral” by Bank of America / Merrill Lynch, which raised its price target to $30 from $24.