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Las Vegas Sands Attracts Last-Minute Traders

Weekly call volume rises on LVS

by 10/26/2012 9:55 AM
Stocks quoted in this article:

Las Vegas Sands Corp. (NYSE:LVS - 46.25) trekked 4.4% higher yesterday, receiving a halo lift after sector peer Wynn Resorts, Limited (NASDAQ:WYNN) raised its quarterly dividend. As a result, LVS saw a bevy of call activity, with roughly 41,000 of these options crossing the tape during the session. This was double the equity's average daily volume, and 1.64 times the number of puts traded.

The most active call proved to be the weekly 46 strike, where north of 4,500 contracts traded at a volume-weighted average price (VWAP) of $0.42. About 40% of these calls crossed at the ask price, suggesting they were bought. Meanwhile, open interest at this strike rose by 1,514 contracts overnight, implying that about one-third of the volume translated into new open interest. In other words, yesterday's action appears to be a mix of profit-taking and new buy-to-open activity. By purchasing these calls, traders are counting on the shares to rise above $46.42 (strike price plus VWAP) prior to today's closing bell.

However, call buying is nothing new for LVS. In fact, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 50-day call/put volume ratio of 2.01 for LVS, signaling calls bought to open have doubled puts during the past few months. This ratio ranks higher than 80% of comparable readings collected within the past year, meaning traders have picked up calls over puts at a faster clip just 20% of the time during the last 12 months.

Similarly, the security's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.78, with calls outpacing puts among the front three-months' series of options. This ratio arrives in the bullishly slanted 27th annual percentile, reflecting a stronger-than-usual preference for short-term calls over puts lately.

Meanwhile, sentiment toward LVS remains upbeat among the brokerage bunch, as the stock boasts 13 "strong buys" and two "buy" ratings. Conversely, only four analysts have handed out "hold" recommendations, and not one has issued a "sell" suggestion.

Technically speaking, LVS is up more than 8% year-to-date, and has outperformed the broader S&P 500 Index (SPX) by about 21 percentage points during the past three months. On the charts, the stock is poised to finish October atop its 32-month moving average, which has been breached just once since 2010. The shares only need to climb fractionally higher today in order for Thursday's bulls to collect a profit on their call positions.


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