Friday, January 4, 2013

Boyd Gaming (BYD) - Stock Spikes as OTM Calls Trade Size

BYD is trading $7.02, up 1.7% with IV30™ up 16.6%. The LIVEVOL® Pro Summary is below.


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Boyd Gaming Corporation (Boyd Gaming) is a multi-jurisdictional gaming company. The Company is an operator of 16 wholly owned gaming entertainment properties and one controlling interest in a limited liability company.

The company has traded 16,251 contracts on total daily average option volume of just 1,109, with calls trading on a 345:1 ratio to puts. The action has been in the Feb 8 calls, with over 11,000 traded. The Stats Tab and Day's biggest trades snapshots are included (below).

The Options Tab (below) illustrates that the calls are mostly opening (compare OI to trade size). When looking down the entire option chain for BYD, I see an OI of nearly 9,000 in the Jan 7 calls, then nothing above 1,700. In English, the trade volume today is huge for BYD -- especially if it's one-sided.

Across the top I also note that both Jan and Feb vol are up more than 9 vol points -- circumstantial evidence that these orders are purchases.

The Skew Tab snap (below) illustrates the vols by strike by month.

What's odd here is that the skew chart is... normal... There's isn't a kink to the upside -- certainly not in Feb. The stock volume today is 1.4MM shares, right on the daily average volume so it doesn't feel like all of these options are getting hedged with stock.

Finally, the Charts Tab (six months) is below. The top portion is the stock price, the bottom is the vol (IV30™ - red vs HV20™ - blue vs HV180™ - pink).

On the stock side we can see the rather impressive rise of late. In Nov this was a sub $5 stock and it's now trading over $7.  The 52 wk range is [$4.75, $9.75].

On the vol side we can see a pop in the implied as the stock rose, but it has cooled off. IV30™ is in the 56th percentile (annual) as of right now, so there's room for it to rise if the flow continues in this direction.  The real question is, are these more bets that the upside rally will continue further?

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This is trade analysis, not a recommendation.

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