MGM Resorts International (MGM) is enjoying a day in the sun, but the bears aren't bailing yet
Today was a good day to be a casino stock, with Wynn Resorts, Limited (NASDAQ:WYNN) adding 4.3% to close at $93.17, and MGM Resorts International (NYSE:MGM) gaining 3.2% to settle at $24.65, after Macau reported a gambling revenue increase of 1% for the month of August -- breaking its two-year long slump. MGM is also on the rise after news that Chinese investor Pansy Ho has acquired 4 million shares of the casino stock from Tracinda Corporation, giving her a 4.8% share of the company's outstanding common stock.
MGM has had a standout 2016, with the shares up nearly 22% year-over-year, and 52.3% higher from their two-year low of $16.18 in February. MGM stock has enjoyed the support of its 80-day moving average since early March, and this trendline is currently docked at $23.55.
Despite this promising price action, MGM's option pits are decidedly less optimistic. The casino operator's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 1.93 sits in the 96th percentile of its annual range, showing a stronger-than-usual appetite for bearish options as of late. Also, MGM's Schaeffer's put/call open interest ratio (SOIR) of 1.33 ranks higher than 98% of all other readings from the past 12 months, suggesting short-term option players have rarely been more put-skewed.
This pessimistic sentiment isn't just confined to the option pits, either. Short interest on MGM Resorts International (NYSE:MGM) is up 19.6% over the past two reporting periods, suggesting traders are overwhelmingly betting against this outperforming stock. As MGM's rise continues, the unwinding of these bearish bets could provide a steady tailwind for additional upside.
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