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Thursday, March 30, 2023


Options Traders Storm Las Vegas Sands Corp. as Shares Soar

Today’s tickers: LVS, PFE, EEM, PNRA, IGT, BTU & UNG

LVS – Las Vegas Sands Corp. – Shares of the owner and operator of The Venetian Resort Hotel Casino and other gaming resorts surged 8.92% to attain a new 52-week high of $23.19 today. The rally in share price at Las Vegas Sands Corp. inspired options investors to initiate bullish trading strategies on the stock. Near-term bullish players populated the April contract by purchasing both in and out-of-the-money call options, as well as by selling out-of-the-money put options. Existing open interest levels in call options at the most heavily trafficked strikes in the April contract (April $21/$22.5/$24) cloud the picture a bit because it is more difficult to pinpoint new positioning. However, fresh plain-vanilla call buying in the September contract provides a clear bullish signal on the casino resort operator. Traders anticipating continued upward movement in the price of the underlying stock through September expiration picked up 2,000 calls at the September $26 strike for an average premium of $2.29 apiece. Investors holding the September $26 strike call contracts profit if Las Vegas Sands’ shares surge 22% from the current price of $23.19 to exceed the effective breakeven point to the upside at $28.29 by expiration day in six months.

PFE – Pfizer, Inc. – A large-volume plain-vanilla debit call spread employed on Pfizer this afternoon indicates one options player expects shares of the underlying stock to rebound by expiration in June. Pfizer’s shares slipped 1.10% lower during the trading session to stand at $16.90. The investor looked to the June $17 strike to purchase 19,500 calls for an average premium of $0.56 per contract, which were spread against the sale of the same number of calls at the higher June $19 strike for $0.08 each. The net cost of the bullish transaction amounts to $0.48 per contract, thus positioning the investor to accrue maximum potential profits of $1.52 per contract should Pfizer’s share price rally more than 12.4% from the current price to $19.00 by expiration day in June. Shares of the global pharmaceutical company last traded above $19.00 on February 2, 2010, when the stock reached an intraday high of $19.33.

EEM – iShares MSCI Emerging Markets Index ETF – Shares of the emerging markets exchange-traded fund, which corresponds to the price and yield performance of the MSCI Emerging Markets Index, increased more than 1% during the current session to reach a new 52-week high of $43.71. One big options player decided to take advantage of cheaper put premiums today by extending a massive protective put position on the fund. It looks like the trader shed 90,000 put options at the April $40 strike for a premium of $0.08 per contract in order to roll the protective stance to the May $40 strike where 90,000 puts were purchased for an average premium of $0.43 each. It is unclear how much the trader initially paid to buy the April contract puts, however the net cost of today’s transaction (in isolation) amounts to $0.35 per contract. Thus, the investor has extended downside protection through to May expiration in case the fund’s shares slump during the current month or during the first few weeks of May.

PNRA – Panera Bread Co., Inc. – Bullish options players picked up call options on the operator of the North American bakery-café chain, Panera Bread Co., today after the firm was initiated as a ‘buy’ with an 18-month target share price of $100.00 at DA Davidson this morning. Panera’s new ratings coverage sent its shares sharply higher by 5.20% to a new 52-week high of $80.35, and inspired options optimists to take a bite out of some calls on the stock. Bullish traders gobbled up 2,700 call contracts on PNRA at the April $85 strike by shelling out an average premium of $1.11 apiece. Call-buyers stand ready to accumulate profits if Panera’s shares rally another 7.15% from the current price to breach the effective breakeven point at $86.11 ahead of April expiration day. The surge in options activity on the stock lifted the reading of options implied volatility on PNRA 9.9% to 28.60% as of 12:40 pm (ET).

IGT – International Game Technology – Shares of the global gaming company engaged in the design, manufacture and marketing of electronic gaming equipment and products surged more than 5% during the trading session to $19.51. Options players eagerly scooped up call options on the stock in order to position for continued bullish movement in the price of the underlying shares through April expiration. Traders picked up approximately 6,600 now in-the-money calls at the April $19 strike for an average premium of $0.58 per contract. Optimism spread to the higher April $20 strike where bullish individuals purchased roughly 3,600 call contracts for an average premium of $0.23 apiece. Higher-strike call coveters are prepared to amass profits if IGT’s shares increase another 3.7% from the current price of $19.51 to exceed the effective breakeven point on the calls at $20.23 by expiration day in a few weeks time. The surge in demand for call options on International Game Technology lifted the overall reading of options implied volatility on the stock 14% to 38.53% as of 12:15 pm (ET).

BTU – Peabody Energy Corp. – Straddle sellers flocked to private-sector coal company, Peabody Energy Corporation, today perhaps to take advantage of slightly higher options implied volatility on the stock stemming from news that Asia’s biggest diversified commodities trading company, Noble Group, is urging Peabody Energy to cancel its proposed A$3.3 billion bid for Australian company, Macarthur Coal. Peabody’s shares are trading up 0.70% to $46.17 as of 12:30 pm (ET). Options traders expecting implied volatility to come off in the near future opted to sell straddles at the May $45 strike where 5,500 in-the-money call options were shed for an average premium of $3.11 apiece, along with the sale of about 5,500 puts for an average premium of $2.09 each. Straddlers retain the gross premium of $5.20 per contract received today if Peabody’s shares settle at $45.00 at expiration. However, investors short the straddle are also exposed to losses should BTU’s shares swing violently away from the central May $45 strike ahead of expiration. Losses start to accumulate for straddle-sellers if Peabody’s shares trade above the upper breakeven price of $50.20, or should shares slip beneath the lower breakeven point at $39.80, by May expiration day.

UNG – United States Natural Gas ETF – Shares of the U.S. Natural Gas exchange-traded fund rallied 3.85% to $7.57 today, but a large options play involving put contracts on the UNG suggests one investor expects shares to continue to rebound through July expiration. It looks like one optimistic options investor enacted a large-volume put credit spread by selling about 30,000 in-the-money puts at the July $9.0 strike for a premium of $1.72 each, marked against the purchase of approximately the same number of puts at the lower July $7.0 strike for an average premium of $0.45 apiece. Net premium received on the transaction amounts to $1.27 per contract. The investor keeps the full amount of premium pocketed on the play if shares of the underlying fund trade above $9.00 each by expiration day in July. The UNG’s shares last traded above $9.00 back on February 19, 2010, when the price of the fund reached an intraday high of $9.26.


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