Call Buyers Target MGM Stock Amid Seasonal Headwinds

MGM's last two fourth-quarter earnings releases have not been well received by Wall Street

Feb 2, 2018 at 12:21 PM
facebook X logo linkedin

MGM Resorts International (NYSE:MGM) is one of the worst S&P 500 stocks to own in February, going back 10 years. Shares of the casino stock have shed 6.87% on average during the month over that time span, finishing positive just three times. Plus, the stock has been stung by negative earnings reactions, with MGM losing 9.3% and 8.3%, respectively, in the sessions immediately following the last two February earnings releases. But options traders have still been betting bullishly ahead of the casino concern's upcoming earnings release, scheduled for the morning of Tuesday, Feb. 20.

Specifically, more than 31,000 calls have been bought to open during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to about 13,600 puts. The most popular call overall, based on open interest added, was the March 39 call. Data shows almost exclusive buy-to-open activity here, so many have been betting on MGM stock rising above $39 in the weeks ahead.

With earnings still a few weeks away, volatility expectations have yet to take off. For example, MGM Resorts has a Schaeffer's Volatility Index (SVI) of 27%, which ranks in the 28th annual percentile. So, on a relative basis, buying premium on near-term options looks attractive.

Meanwhile, analyst opinions remain high. Eight of the 12 brokerage firms covering the stock say it's a "strong buy" or "buy" and the average 12-month price target is $39.13. At last check, MGM shares were down 2.7% at $35.82 amid broad-market headwinds, but they still sport a one-year gain of 24%.


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 calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI