When identifying potential M&A targets, a smart strategy is to key in on unknown stocks receiving consistently bullish options activity. With a market cap of only $2.3 billion, Scientific Games SGMS – NASDAQ fits the bill and earlier today a trader with deep pockets bought 10,000 SGMS January 28 calls for $2.90 each.
With SGMS trading 2,000 calls per day on average, not only is the volume unusual but the capital totals $2.9 million. Given a break-even price at $30.90, SGMS needs to increase 21.2% for this trade to pay off by expiration. Above this level, our trader will make $1 million for every dollar SGMS rises.
This order is in addition to the existing 30,000 SGMS January 28 calls in open interest, making us wonder just what SGMS has up its sleeve.
Top 5 Imminent Mergers & Acquisitions: By tracking highly unusual options trades, we tip members to upcoming buyouts, M&A activity, and secret boardroom deals before the news is public. Some members have described it as “having a wiretap on every single company.” Click here for the top 5 stocks about to make some major headlines.