NEW YORK -- Traders put their money into Boyd Gaming (BYD) early Wednesday and hit the jackpot in a hurry.
OptionMonster's tracking systems detected unusual activity in the January 11 calls, with buyers paying 50 cents to 60 cents less than an hour into the session. They pushed higher as the stock rose, doubling to $1.05 by the afternoon. More than 8,600 contracts traded against open interest of just 2,115.
These calls lock in the price where a stock can be purchased no matter how far it might climb. Their relatively cheap cost also gives them the potential for significant leverage, which is exactly what happened with Boyd.
The casino operator ended the day up 10% to $11.50. The rally came just one day after the stock was flagged as a short-squeeze candidate on our proprietary Market Action webinar.
Overall option volume was seven times greater than average in the name on Wednesday, with overall calls accounting for a bullish two-thirds of the total.
Russell has no positions in BYD.