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Option Bears Circle as Las Vegas Sands Pulls Back

Short-term bearish bets are popular today, as LVS stumbles

by 12/4/2012 12:43 PM
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The demand for Las Vegas Sands Corp. (NYSE:LVS - 45.31) puts has been growing in the options pits in recent weeks. The stock's 10-day International Securities Exchange (ISE)/Chicago Board Options Exchange (CBOE)/NASDAQ OMX PHLX (PHLX) put/call volume ratio has risen to 0.72, from its 50-day put/call volume ratio of 0.51. Additionally, this shorter-term ratio ranks in the 71st percentile of its annual range, indicating puts have been bought to open over calls at an accelerated clip during the past two weeks.

Puts are preferred in today's session, with the bearishly skewed bets having a slight edge over their call counterparts. Roughly 11,000 put contracts have changed hands at last check, versus fewer than 10,000 call contracts. Short-term bears are hoping today's sector-related swoon continues, and are zeroing in on LVS' 12/7 weekly 45-strike put. The majority of these have crossed at the ask price, and only 277 contracts currently make up open interest here. In other words, it appears new positions are being initiated.

By buying to open the near-the-money 45-strike put for a volume-weighted average price (VWAP) of $0.49, the speculators need LVS to finish the week (when the options expire) south of the $44.51 mark (the strike minus the average net debit) in order for the options to be profitable. This breakeven level represents a 1.8% drop from the equity's current perch.

On a technical basis, the stock has had a strong showing in the latter half of 2012, adding more than 30% since hitting its year-to-date low of $34.72 on July 26. Plus, during the past 60 sessions, the equity has outperformed the broader S&P 500 Index (SPX) by nearly 10 percentage points, on a relative-strength basis. However, the stock's momentum has been stunted by its 200-day moving average, which has served as a stern layer of overhead resistance since mid-September.

As touched upon, LVS is wallowing in the red with its fellow casino concerns today, after the Chinese government made clear its intentions to up its presence in Macau's gaming regulations. The stock was last seen roughly 3% lower, churning near the $45.31 mark. Although, LVS toppled its upper Bollinger Band in yesterday's session, suggesting the stock may have been due for a short-term consolidation.


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