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Following the announced departure of Sands China Ltd. chief operating officer David Sisk yesterday, parent company Las Vegas Sands Corp. (NYSE:LVS) experienced a significant uptick in put volume. In particular, about 17,000 contracts traded on the put side -- more than two times the typical daily amount. Nevertheless, a closer look reveals that not all of the action was of the bearish variety.
The most active LVS option Tuesday was the September 55 put. Over 5,800 contracts traded at the out-of-the-money strike, with over three-quarters going off at the bid price -- indicating they were sold. Open interest increased overnight by roughly 3,500 contracts, as well, which suggests the creation of new neutral-to-bullish positions.
Digging deeper, the puts were written to open for a volume-weighted average price (VWAP) of $0.67. This also represents the maximum potential profit for the aforementioned speculators, should the shares not breach the strike before the front-month options expire. On the other hand, if Las Vegas Sands dips below that mark, the put sellers risk being assigned -- in which case, they would be obligated to buy 100 shares for $55 apiece (per contract sold), no matter how far south the shares sank.
Currently, Las Vegas Sands Corp. (NYSE:LVS) is trading at $58.34, so there's a decent-sized buffer -- 5.7%, to be exact -- between the stock's current perch and the strike price. At last check, delta on the option stood at negative 0.22, or 22%, so the chances of it moving in the money by expiration are slightly better than 1-in-5.
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