Options Activity of IGT on Thursday, June 10, 2010
International Game Technology (IGT)
Puts have been the options of choice among IGT speculators today. So far, the equity has seen around 2,300 puts cross the tape – more than tripling its expected daily put volume.
Garnering the most attention has been the at-the-money June 19 put, which has seen roughly 2,200 contracts change hands on open interest of fewer than 400, pointing to new positions. Furthermore, the majority of the puts have traded closer to the ask price, underscoring our suspicions of newly added bearish bets.
However, today's affinity for pessimistic positions runs counter to the growing trend on the ISE, where speculators have bought to open almost 22 times as many IGT calls than puts over the past couple of weeks. What's more, the security's 10-day call/put volume ratio of 21.53 stands only four percentage points shy of an annual bullish peak.
Further reflecting the high hopes among the options bunch is the stock's SOIR of 0.61, which implies that calls comfortably outnumber their put rivals among options with less than three months to expiration. In fact, this ratio stands higher than only 25% of all other readings taken during the past year, indicating that near-term option players have been more optimistically aligned toward IGT only one-quarter of the time.
Meanwhile, it appears analysts are also enamored of IGT. According to Zacks, the stock has earned 12 "strong buys" and two "buy" endorsements, compared to five lukewarm "holds" and not a "sell" on the radar.
On the charts, IGT has also been a broad-market standout lately, outpacing the SPX by 21.5% during the past 60 sessions. However, the security has struggled to break free of a trading range during the past year, with rally attempts rejected in the $22-$23 region, and pullbacks contained by its 60-week moving average, which served as resistance in mid-2009.
In conclusion, the elevated expectations for IGT on the Street could spell trouble on the charts, should the shares fail to maintain a foothold atop trend line support. Not only could the stock's 60-week moving average revert to its role as resistance, but the aforementioned bulls could hit the exits. An unwinding of optimism in the options arena, or a slew of negative analyst notes, could weigh on the stock.
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