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Casino stocks like Las Vegas Sands Corp. (NYSE:LVS - 47.01) have muscled higher today, and it looks like the options crowd is rolling the dice on even more upside for LVS. So far, the stock has seen roughly 32,000 calls change hands -- nearly three times its average intraday call volume. On the flip side, just around 12,000 LVS puts have traded thus far.
Upon closer inspection, we find that investors have honed in on LVS' weekly calls. Specifically, the stock's weekly 47- and 47.50-strike calls have seen around 4,100 and 3,700 contracts cross the tape, respectively. Volume has exceeded open interest at both strikes, and the majority of the calls have traded at the ask price, pointing to buy-to-open activity.
By purchasing the calls to open, the buyers are expecting LVS to extend today's upward momentum through the end of the week. In fact, the volume-weighted average price (VWAP) of the 40-strike calls is $0.68, meaning the buyers will profit if LVS topples the $40.68 level (strike plus premium paid). Meanwhile, the 47.50-strike calls crossed at a VWAP of $0.60, indicating a breakeven level of $48.10 on the trade.
However, even before today's ascent -- which follows a casino-sector rally in Asia ahead of China's Golden Week holiday -- LVS speculators were scooping up long calls. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day call/put volume ratio of 3.22. What's more, this reading stands just six percentage points from a 52-week acme, suggesting options traders have bought to open LVS calls over puts at a near annual-high clip during the past couple of weeks.
As a result, the equity's Schaeffer's put/call open interest ratio (SOIR) now sits at 0.71, indicating that calls comfortably outnumber puts among the front three-months' series of options. Plus, this ratio registers in the 18th percentile of its annual range, implying that short-term speculators are much more call-skewed than usual at the moment.
Echoing that optimism, LVS boasts 14 "strong buys" and three "buy" ratings from analysts, compared to three lukewarm "holds" and not a single "sell" or worse recommendation.
Technically speaking, LVS has outperformed the broader S&P 500 Index (SPX) by about 15 percentage points during the past 40 sessions, and is on pace to end the week atop its 80-week moving average for just the second time since May. This trendline contained the security's pullbacks during the final quarter of 2011, and could resume its role as a technical backstop. However, the equity is still staring up at the $50-$52 region, which halted LVS' rally attempts from October 2010 until February 2012.
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