Option traders are bullish over long-term prospects for MGM Resorts as shares continue to rally off established support levels.
MGM finished yesterday at $10.22, up 6.8 percent on the day after an analyst upgrade. The move continues the rally off the support at $8.90 that has been in place for all of the last year. The price does, however, remain in a downtrend since hitting the 52-week high of $16.66.
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The options were also active. The average daily volume is 17,000 contracts, but yesterday MGM saw more than 61,000 change hands, with calls outpacing puts by 3 to 1. Leading the way were the January 2012 17.50 calls, according to
Most of those options traded over 5 minutes in large blocks, all bought for $1.10. The previous open interest was 4,631 contracts, so this was a new opening position.
The call buying by itself is bullish, but there was also a tremendous amount of stock trading at the same time. During the time when the options traded, more than 600,000 shares of stock also moved, so this could have been part of a delta-neutral strategy that depends more on sharp moves than specific direction. However, the trade still reflects long-term bullishness in MGM.
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Chris McKhann is an analyst and writer for .