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Put Players Target a Pullback for Las Vegas Sands Corp. (LVS)

Bears are circling around LVS today

by 4/15/2013 12:11 PM
Stocks quoted in this article:

Las Vegas Sands Corp. (NYSE:LVS) is falling in concert with the broader equities market today, and was last seen down 2.1% at $54.18. As such, put volume has accelerated in LVS' options pits. More than 5,800 contracts have changed hands at last check, representing a 50% mark-up to the average intraday put volume. Traders are forecasting a bearish end to the week, and are scooping up the stock's April 55 put. Of the nearly 1,400 contracts traded here thus far, 62% have crossed at the ask price, and implied volatility has moved 5.2 percentage points higher, hinting at buy-to-open activity.

These in-the-money puts are being purchased for a volume-weighted average price (VWAP) of $0.97. In other words, Las Vegas Sands needs to fall below breakeven at $54.03 (strike price less the VWAP) by Friday's close -- when front-month options expire -- for the options to be profitable. Risk, meanwhile, is limited to the initial premium paid.

Options traders, departing from their strategy toward sector peer Wynn Resorts, Limited (NASDAQ:WYNN), have preferred calls over puts on Las Vegas Sands Corp. in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 1.98 suggests that nearly two calls have been bought to open for every put over the past 10 weeks. This ratio ranks in the 69th percentile of its annual range, implying bullish bets have been placed over bearish at a faster-than-usual pace.

Even more telling of this bullishly skewed bias is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.64, which ranks lower than 95% of other such readings taken during the past year. Simply stated, short-term speculators have rarely been more call-heavy toward LVS.

On the charts, Las Vegas Sands Corp. (NYSE:LVS) has added a formidable 17.3% in 2013 and has outpaced the S&P 500 Index (SPX) during the last 20 trading sessions.


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