Options Traders Rush to Casino Stocks After Macau Data

Casino stocks are on the rise after the latest revenue figures out of Macau

May 2, 2016 at 3:56 PM
facebook twitter linkedin


The monthly update on casino activity in Macau -- China's version of Las Vegas -- has been known to cause some outsized moves among casino stocks. This time around, the numbers are acting as a boon to the sector, after revenues from Macau casinos fell less than expected in April. As a result, casino stocks Wynn Resorts, Limited (NASDAQ:WYNN)Las Vegas Sands Corp. (NYSE:LVS)Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), and MGM Resorts International (NYSE:MGM) are all on the rise. Let's take a quick look at how options traders are responding on WYNN, LVS, MPEL, and MGM. 

Starting with WYNN, the stock is up 6.7% at $94.20, as the shares add to their stellar 2016. However, options volume is still running at a below-average intraday pace, even though the company is tentatively scheduled to report earnings this week. 

LVS is up 3.9% at $46.91, looking to recover from last month's post-earnings plummet. In the options pits, calls are crossing at 1.5 times the average intraday clip. Much of the activity has centered on the weekly 5/6 47- and 48-strike calls, as traders place bets before the contracts expire at week's end. 

As for MPEL, the shares have gained 3.6% at $15.34 -- though they remain below their 200-day moving average that's stifled breakout attempts for over two years now. Today's rally has failed to inspire options traders, as volume remains light -- even with MPEL's Schaeffer's Volatilty Index (SVI) of 50% sitting in the low 19th percentile of its annual range. In other words, it's relatively inexpensive to buy short-term MPEL options right now, from a volatility perspective. 

Lastly, MGM is sitting within a chip shot of its year-to-date breakeven level, up 1.8% at $21.68. However, it's actually been put players that have responded to today's price action, with the weekly 5/6 20.50-strike put standing as the most popular option. It looks like traders are buying to open positions here, betting on the stock to reverse lower by week's end -- a time frame that encompasses the casino operator's Thursday morning earnings report.

Elsewhere, it's likely a recent batch of short sellers are kicking themselves amid this surge in casino stocks. More specifically, Wynn Resorts, Limited (NASDAQ:WYNN), Las Vegas Sands Corp. (NYSE:LVS), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), and MGM Resorts International (NYSE:MGM) all saw short interest rise in the latest reporting period. 

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

Winning With Weekly Options

1606854690

  


 
Special Offers from Schaeffer's Trading Partners