Sports Betting Breakout? Options Traders Look for Huge Move in British Lottery Stock

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Someone is looking for a giant move from International Game Technology, a lottery operator that’s been expanding into sports betting.

This large bullish options trade occurred on the London-based company yesterday morning:

  • The investor purchased 20,000 November 26 calls for $1.68.
  • They also sold 20,000 November 33 calls for $0.30.
  • That translates into a net cost of $1.38.

Calls fix the price where investors can purchase a stock. Investors can purchase them to profit from a rally. They can also sell them to earn premium, as in this trade.

International Game Technology (IGT), daily chart, with 50-day moving average.

Known as a vertical call spread, the strategy can leverage a move between two prices. He or she will collect $7 (the difference between 26 and 33) if IGT advances to the higher price by expiration on November 19. Based on their $1.38 outlay, that’s a potential profit of 407 percent. The position will expire worthless if the stock remains under $26.

IGT rose 5.26 percent to $23.62 yesterday, its highest closing price since early July. There didn’t appear to be any news explaining the surge. Still, the company has been making deals to grow its PlaySports service, which helps casino operators expand into sports betting.

The strike prices used in the trade are also noteworthy. The $26 level is near the three-year high in early June. Some chart watchers may expect a rally if IGT breaks that resistance. $33 was also a support zone in 2008 before the subprime crisis dragged prices lower. Traders may now expect that to offer resistance.

Overall options volume in IGT was more than 8 times the average over the past month. Calls accounted for a bullish 89 percent of the total.

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