Casino Stock Upgraded on Gaming, Sports Betting Presence

Options traders are blasting MGM with calls

Digital Content Manager
Sep 13, 2021 at 11:14 AM
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The shares of MGM Resorts International (NYSE:MGM) are up 1.4% to trade at $42.87 this morning, after the casino giant earned an upgrade from Bernstein to "outperform" from "market perform," as well as a price-target hike to $58.90 from $29.60. The analyst cited the company's real estate portfolio, as well as its growing presence in the gaming and sports betting field.

What's noteworthy about the upgrade is that analysts were bearish towards the security coming into today. Of the eight in question, five called it a tepid "hold" or worse rating. Given the stock's 36% year-to-date gains, more upgrades could be on the horizon.

Despite a June 24, 13-year high of $45.33, MGM stock has consolidated below the $44 level for the last couple of weeks, after staging bounces off its 200-day moving average.  Year-over-year, the security sports an 89% lead.

So far today, 6,518 calls have crossed the tape, which is twice the intraday average. The most popular is the September 43 call, followed by the 44 call in the same series. This means options traders expect more upside for MGM by the end of the week, when these contracts are set to expire.

Now may be an ideal time to bet MGM's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 39% stands higher than 15% of readings from the past year. This means options traders are pricing in relatively low volatility expectations for the equity at the moment. 

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