MGM Resorts International (MGM) Traders Gamble on Gains

MGM Resorts International (NYSE:MGM) is benefiting from sector tailwinds today

by Alex Eppstein

Published on Jun 4, 2015 at 3:12 PM
Updated on Jun 24, 2020 at 10:16 AM

It's been a strong day for casino stocks, and MGM Resorts International (NYSE:MGM) is no exception. Helped by an analyst-induced halo lift from one sector peer and an upbeat article from Barron's for another, the stock has added 3.2% to trade at $20.33. Meanwhile, eleventh-hour option bulls are gambling on additional upside through tomorrow's close.

Diving right in, MGM calls are trading at double the expected intraday clip. Most active by far is the weekly 6/5 20.50-strike call, where new positions are likely being purchased. These potential call buyers are wagering on the stock toppling $20.50 by week's end, when the series expires.

Call buying is par for the course, as far as MGM is concerned. 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 4.30 sits just 1 percentage points from an annual high.

Technically speaking, however, MGM Resorts International (NYSE:MGM) has done little to merit such optimism -- today's gains notwithstanding. Year-to-date, the equity has lost nearly 5%, and has underperformed the broader S&P 500 Index (SPX) by more than 10 percentage points over the last two months.

A Schaeffer's 39th Anniversary Exclusive!

8 Top Stock Picks for 2020

Access your FREE insider report before it's too late!