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Monday, July 15, 2024

Las Vegas Sands back in the firing line

Today’s tickers: LVS, WYNN, UAUA, MCO, CMCSK, ZION & MTB

LVS – Las Vegas Sands – News today has it that the Macao operations of the mother operation of the Vegas luxury hotel and casino operator has laid off 2% of its staff and is reducing working hours of remaining employees to cut operating costs. With such a bleak outlook investors have leaned consistently on its share price and today is no exception with a 7.9% decline to $6.15. Option traders have been busier with the notable sale of 77,000 call options expiring in February at the 10.0 strike price. The 45 cent premium reflects the risk that the seller will undertake to deliver the shares if called by expiration. Such a large trade most likely involves a stock position behind it.

WYNN – Wynn Resorts Ltd. – Investors seem more prepared to take a less bearish stance at luxury hotelier, Wynn resorts. Although its shares are 2% lower in Monday’s trade at $42.18 the option activity here shows an investor taking in premium banking that its share price won’t breach $25.00 per share by January’s expiration. Some 17,900 put options were written at the 25.0 strike in receipt of a dime in premium. Shares would need to plummet by 40% during the next four-week cycle to harm the views of this modest bull.

UAUA – UAL Corp. – There was heavy activity in United Airlines stock options today where an investor traded 25,000 call options in the January contract. With shares trading down 1.8% lower at $10.89 one wonders whether this investor might know something we don’t given the call options reserve rights to buy shares at a fixed $12.50 in this case before expiration. However, the premium of 90 cents and the fact that the calls traded to the bid show that this investor is most likely unwinding a long position at the strike given there are 48,000 lots of open interest in existence already. The build in open interest occurred on November 3, when shares in UAL closed at $16.59. At the time investors appeared to pay between 6.10 and 7.10 premium to establish these trades. We’d need to check Tuesday’s open interest reading, but this could also be an investor getting long of the stock and writing calls against it. Quite why the optimism we’re not sure.

MCO – Moody’s Corp. – Shares in the ratings agency are 3.2% lower today and stand at $22.27. It appears that an investor has established some significant options trades in Monday’s market. Three trades appeared on our scanners at the same moment indicating that their association is tied together. The trade involved the sale of 10,000 lots each at the January 20 and 17.5 strike puts, which were sold at 90 and 50 cents premium each. The February 22.5 strike puts were purchased 10,000 times at 3.25. The investor is taking a view that while the stock might fall, it won’t necessarily fall below a share price of $17.50 by the time the first option series expires. Without an established short stock position to match the option position, the investor would need to buy shares if delivered against at that point. The investor could be actually closing long positions in the January contract and rolling into February at this stage. Implied volatility stands at 82% today.

CMCSK – Comcast Corp. – Some 90,000 call options were sold for a penny this morning when an investor appears to have bailed out of a long January options play at the 22.5 strike. Shares in the cable and Internet provider are largely unchanged at $15.06. The 93,000 open interest at the strike price amounts to around 43% of the entire open interest on Comcast options.

ZION – Zion Bancorp. – Option implied volatility rose by 16% to 130% on Zions Bancorp today as its share price slipped 3.1% to $24.17 and rights to sell its shares in January were in heavy demand. Granted, some of today’s 45,000 put options in play might represent closure of profitable put spreads, but it does appear that option investors are looking for further declines in the share price over the coming weeks. At the 25 strike, investors traded almost 22,000 contracts granting selling rights and they paid premiums of between 3.7 and 4.0 to establish those rights. That yields a break even share price at expiration of about $21.00. investors also bought more than 3,000 puts at each of the 20 and 22.5 strikes in expectations that the share price might gravitate towards its established 52-week low point at $16.78.

MTB – M&T Bank Corp. – Shares are higher at $56.35 but once again it’s put activity that’s taking the fancy of option investors. This time we’re stumped since the in-the-money volume leaves us scratching our heads for a solution. An investor has traded 10,000 puts at the 60 line at a 6.40 premium, while 5,000 puts at the 80 line were transacted at a 23.10 premium.

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