Bullish option traders made lightning-fast money in MGM Resorts today.
Just yesterday, Investitute’s market scanners detected the purchase of 7,600 July $33 calls for $0.12 to $0.18 with shares at $32.61. The stock was well above the strike’s open interest of 5,664 contracts, indicating that this was fresh buying.
Today those calls sold for as much as $0.96, an average gain of more than 500 percent in 24 hours. The stock was up just 4.14 percent at the same time, showing how quickly options can far outperform their underlying shares.
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.
MGM rose 2.87 percent to $33.73 today after replacing Reynolds American in the S&P 500. The casino operator is scheduled to report earnings next Thursday before the market opens.