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Wednesday, December 6, 2023

Short-Term Bullish Bets Mount As Las Vegas Sands Extends Rally


Today’s tickers: LVS, S & PG

LVS – Las Vegas Sands Corp. – Weekly call options on the casino operator continue to see heavy action as shares in Las Vegas Sands extend their sharp run to the upside. The stock is up more than 12.0% year-to-date and some options traders are positioning for the momentum to continue, abandoning concerns that slowing growth in China may curtail activity in Macao. Optimism the Chinese New Year will boost revenues in the Asian gambling hub is also helping the stock’s fast-and-furious drive toward the February 3, 2011, 52-week high of $50.65. Shares are currently up 2.9% on the day to arrive at $49.31 as of 1:30 p.m. in New York. Traders exchanged more than 3,200 now in-the-money calls at the Jan. ’27 $49 strike, with much of the volume generated by buyers shelling out an average premium of $0.43 per contract. Investors long the $49 strike calls may walk away with profits at week’s end as long as shares in LVS exceed the average breakeven price of $49.43. Bullish positioning spread to the higher Jan. ’27 $50 strike where more than 1,300 calls were purchased at an average premium of $0.17 apiece. Weekly call buyers profit if shares in the owner of casino resorts extend gains heading into the weekend, but are not exposed to the reaction of shares following Las Vegas Sands Corp.’s earnings release next Thursday.

S – Sprint Nextel Corp. – Big prints in Sprint puts made the wireless communications company one of the most active names by options volume today. Shares in the wireless provider are down 1.4% at $2.14 in early-afternoon trade, hovering just four pennies above the October 10, 2011, multi-year low of $2.10. Options volume on Sprint Nextel Corp. is greatest out at the Aug. $2.0 strike, where more than 38,000 puts changed hands against open interest of 2,220 contracts. The majority of the options appear to have been purchased by one or more investors who may be taking an outright bearish stance on the stock, or hedging a long position in the shares. Though the options were not marked as having been tied to any transaction in the underlying today, it’s impossible to know what positions traders already hold or intend to take on going forward. Hypothetically speaking, an investor anticipating a recovery in Sprint’s shares by August expiration might get long the shares at the current nearly three-year low and hedge the position with an exit strategy in the form of long puts. On the other hand, outright put buying on Sprint would suggest traders see a different outcome, one in which shares extend losses during the next seven months to expiration. In the latter scenario, investors long the put options profit at August expiration if shares in Sprint Nextel Corp. drop 21.5% to breach the average breakeven price of $1.68. Sprint’s shares have not traded down as low as $1.68 since December 2008. The Company is scheduled to report fourth-quarter earnings ahead of the opening bell on February 8.

PG – Procter & Gamble Co. – Call options are active on Procter & Gamble this afternoon, two days ahead of the consumer products giant’s second-quarter earnings release on Friday. Shares in PG are currently up 0.50% to stand at $64.83 as of 12:45 p.m. in New York. It looks like the single largest trade in Proctor & Gamble options occurred in the March expiry. More than 8,100 calls have changed hands at the Mar. $67.5 strike against open interest of 2,081 contracts and it appears the majority of the calls were purchased for an average premium of $0.30 each. A block of 5,831 of those calls traded to the middle of the market at $0.29 each. Closer-to-the-money options in the March contract are also popular today, with traders buying around 1,200 of the Mar. $65 strike calls at an average premium of $1.22 apiece. Call buyers may profit at expiration in the event that PG’s shares extend gains during the next couple of months to exceed the implied breakeven prices of $66.22 and $67.79.


Caitlin Duffy

Equity Options Analyst


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