Bullish option traders hit the jackpot in International Gaming Technology today.
On July 24, Investitute’s tracking systems detected the purchase of 2,100 August $20 calls for $0.55 to $0.65 with shares at $19.98. Volume was well above the strike’s open interest of 896 contracts, showing that this was new positioning.
Today those calls traded as high as $2.58, a gain of more than 300 percent on average. The stock rose just 3 percent in the same time frame, underscoring the kind of leverage that can be achieved through options.
Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.
IGT rose 12.71 percent today to close at $21.46. The U.K.-based manufacturer of casino gaming systems beat revenue estimates and reduced debt. The rally followed huge gains and heavy option activity in Scientific Gaming, a U.S. competitor.