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Pre-Earnings Put Buyers Blitz International Game Technology

Traders are scooping up IGT puts at a rapid-fire rate today

by 1/23/2012 11:22 AM
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Casino concern International Game Technology (IGT - 16.67) is scheduled to step up to the earnings podium bright and early tomorrow morning. Ahead of the event, it looks like the options crowd is upping the bearish ante on the stock.

So far today, IGT has already seen more than 4,600 puts cross the tape -- far surpassing its average daily volume of fewer than 70 puts. For comparison, just about 500 IGT calls have changed hands.

Digging deeper into the data, we find that nearly all of the action has centered on the at-the-money February 16 put, which has seen almost 4,500 contracts traded on open interest of fewer than 150, pointing to an influx of new positions. What's more, the majority of the newly front-month puts have crossed at the ask price, suggesting they were bought. By purchasing the puts to open, the buyers are betting on IGT to retreat beneath the $16 level over the next several weeks.

From a broader sentiment standpoint, today's preference for long puts is a far cry from the norm. In fact, the equity sports a 10-day call/put volume ratio of 185.52 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Furthermore, this ratio registers in the 97th percentile of its annual range, implying that options speculators have bought to open IGT calls over puts at a near annual-high clip during the past couple of weeks.

At last check, IGT has given up 0.3% to explore the $16.67 level. According to Thomson Reuters, the company has bested the Street's per-share earnings predictions in each of the past four quarters.


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