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Bears Gamble with Boyd Gaming's Longer-Term Puts

BYD puts score big with options players

by 1/12/2012 11:08 AM
Stocks quoted in this article:

Bearish speculators showed an increased interest in Boyd Gaming (BYD - 7.36) yesterday, despite data showing a statewide increase in Nevada gambling revenue in November. More than 4,600 puts changed hands, representing an impressive 24 times the equity's average daily volume. Most of the action centered around the March 6 and June 7 strikes, where a total of 4,025 puts were traded -- nearly all of them at the ask price, suggesting they were bought. Open interest on both of these options climbed significantly overnight, pointing to a fresh batch of new positions.

This favoritism toward puts over calls is nothing new for BYD. The Schaeffer's put/call open interest ratio (SOIR) checks in at 1.49, confirming that puts comfortably outnumber calls among options set to expire within three months. In fact, this ratio sits just eight percentage points shy of a yearly acme, meaning that near-term options players have rarely been more put-heavy toward the stock during the past year.

What's more, the majority of analysts following the gambling concern seem to feel lukewarm toward BYD. According to Zacks, the equity boasts only four "buy" or better ratings, compared to 11 "holds" and two "sell" or worse recommendations.

From a technical perspective, BYD has lost around 1.5% of its value so far this month, but has outpaced the broader S&P 500 Index (SPX) by more than 11% during the past 20 sessions. On the charts, the stock is on pace to close a third consecutive week above its 32-week moving average, which had acted as resistance since mid-March.

In the morning hours of the session, however, the equity is down about 2.7% and is trading at $7.36.


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