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Las Vegas Sands Corp. (NYSE:LVS) is bucking the broad-market trend lower on positive developments coming out of Macau. At last check, the stock was up nearly 1% to $69.51, after earlier notching a multi-year high of $70.62. Meanwhile, in LVS' options pits, volume is soaring -- particularly on the call side, where the 86,000 contracts traded outpace the typical intraday volume by around a seven-fold margin.
The November 72.50 call is the session's most active strike, with over 33,000 contracts on the tape. The strike's popularity, however, is largely attributable to a single speculator, who traded a 30,000-lot of the back-month calls at the ask price of $1.44 each. Based on the fact that volume outstrips open interest and implied volatility ticked upward on the transaction, it's safe to assume the individual bought the LVS calls to open. In order for the trader to profit, he needs the shares to topple $73.94, or the strike price plus the premium paid. By contrast, if the stock remains below the strike price throughout the option's lifetime, the call buyer will lose his initial cash outlay.
A closer look, however, reveals that outlay may have been supplemented by profits from a simultaneous trade. At the same time the aforementioned block went off, a 19,850-lot of November 67.50 calls also traded. These, however, traded at the bid price of $3.95. According to Trade-Alert, the contracts were likely sold to close, after being opened on Sept. 24 at the ask price of $2.02 each. In other words, this trader may have rolled up his bet -- and added to the size of it -- using the premium received from the sale of the lower-strike calls to help pay for the higher-strike calls.
On a side note, after the market closes this Thursday, Las Vegas Sands Corp. (NYSE:LVS) will step foot into the earnings confessional. For the third quarter, the average analyst estimate has the gaming firm taking home a profit of 75 cents per share, or 29 cents higher than one year ago. Historically speaking, however, LVS has struggled to beat Wall Street's consensus, bottom-line view, accomplishing the feat just three times in the past eight quarters.
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