Penn Entertainment Stock Surges on Disney Deal

Options traders are blasting the security after a strong quarter

Digital Content Manager
Aug 9, 2023 at 10:03 AM
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PENN Entertainment Inc (NASDAQ:PENN) announced a second-quarter earnings and revenue beat before the open, amid a return to casinos and rising demand for online sports betting. The company also revealed a $2 billion deal with Walt Disney's (DIS) ESPN to launch an online sports betting business under the brand ESPN Bet and sold Barstool Sports back to its founder, David Portnoy. 

At last check, PENN was up 12.5% to trade at $27.95 -- its highest level since early May -- after earlier bursting through a ceiling at the $28 level that rejected rallies in June and July. The shares still sport a roughly 17% year-over-year deficit, but may close above their 120-day moving average for the first time since February.

Short sellers are still firmly in control, with short interest up 15.7% in the last two reporting periods. The 11.25 million shares sold short account for 7.4% of Penn Entertainment stock's available float. Should these shorts start covering the bearish bets, PENN could surge even higher.

Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 6.95 sits higher than 93% of readings from the past 12 months. This means long calls have been picked up at a much quicker-than-usual clip.

Drilling down to today's options activity, 26,000 calls and 10,000 puts have already been exchanged, or 15 times the intraday average volume. The August 30 call is the most popular. 


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