Traders hit jackpot in $BYD calls

Traders collected big winnings in Boyd Gaming today.

On Dec. 5, Investitute’s proprietary programs cited the purchase of 3,200 January $32 calls for $1.10 to $1.20 with shares at $32.09. Volume was above the strike’s open interest of 2,904 contracts, indicating that this was fresh buying.

Those calls traded up to $3.10, nearly triple their original purchase price. The stock rose 8.3 percent in the same time frame, showing how quickly options can far outpace gains in their underlying shares.

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.

BYD jumped 7.55 percent to $34.77 today. The casino operator announced this morning that it is buying $575 million in assets from rival Penn National Gaming as part of its deal to acquire Pinnacle Entertainment.