Call buying picked up in MGM Mirage yesterday as traders bet that the casino company may have put in a bottom.

OptionMonster's systems detected bullish trading patterns in the heavily shorted leisure stock. Call volume is almost four times the average level amid heavy buying, while four times more puts have been sold than purchased.

In the largest trade, an investor snapped up about 20,000 January 2011 20 calls against open interest of 1,739 contracts. Most of the transactions priced for $0.70.

MGM rose 5.91 percent to $9.67 yesterday but is down 27 percent in the last three months. The company reported a huge loss on Nov. 5 after writing down the value of its stake in the Las Vegas City Center project.

Despite the steep declines, the shares

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[MGM  Loading...      ()   ] appear to be finding support slightly above the $8.70 level where they bottomed last month and around the same level that served as resistance in August. The stock also has the potential to get squeezed higher because short interest represented a hefty 43 percent of the float on Nov. 30.

Other investors purchased the January 10 calls in size for $0.29 to $0.37, though volume was below open interest. Heat Seeker also detected new money flowing into the January 11 calls for $0.11 to $0.15.

Overall options volume in MGM is more than twice the average level, despite broader market activity running at about half the usual pace.

(Disclosure: Russell owns MGM calls.)

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David Russell is a reporter and writer for OptionMonster.

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