Option Bulls Bombard Surging MGM Resorts International (MGM)

MGM Resorts International (MGM) calls are trading at 10 times the average intraday pace

Mar 17, 2015 at 11:10 AM
facebook X logo linkedin

MGM Resorts International (NYSE:MGM) is flying today -- up 9.5% at $21.50 -- on reports Land & Buildings Investment Management is urging the firm to transform its properties into a real estate investment trust (REIT), and spin off its casino assets into a separately traded company. Against this backdrop, calls are trading at 10 times what's typically seen at this point in the day. Short-term contracts are in high demand, too, per MGM's 30-day at-the-money implied volatility, which has jumped 9.9% to 35.2%.

Most active is MGM'S March 22 call, which appears to be seeing a mix of buying and selling. However, it's unclear whether positions are being closed or opened here. More clear-cut activity is occurring at the equity's weekly 3/27 22-strike and May 22 calls, where all signs suggest new positions are being purchased. By buying the calls to open, speculators expect MGM to rally north of $22 by the respective expiration dates.

Similar to sector peer Wynn Resorts, Limited (NASDAQ:WYNN), call buying has been a popular strategy in MGM's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 4.12 ranks in the 91st annual percentile. In other words, calls have been bought to open over puts with more rapidity just 9% of the time within the past year.

Also like WYNN, MGM has struggled on the charts. Year-over-year, the shares have shed roughly one-fifth of their value (although, today's bull gap has the security hovering above its 2015 breakeven line). With nearly 10% of MGM Resorts International's (NYSE:MGM) float sold short, though, a portion of the recent call buying -- particularly at out-of-the-money strikes -- could be a result of shorts hedging against any unexpected upside.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI