Q2 STOCKS TO BUY

Melco Resorts Calls Hot as Macau Data Drops Stock

Macau gaming revenue growth fell short for a second straight month

Jul 2, 2018 at 2:39 PM
facebook X logo linkedin


Casino stocks are spiraling today, after Macau gaming revenue growth missed analysts' estimates for a second straight month in June. One name seeing heavy selling is Melco Resorts & Entertainment Ltd (NASDAQ:MLCO), and options traders have been quick to respond.

At last check, MLCO stock is down 10.6% to trade at $24.77, and more than 30,000 options have changed hands -- six times what's typically seen. Most of the action is occurring on the call side, due to what may be a possible roll down of some October calls.

Specifically, 10,000 October 30 calls were sold earlier at the same time 5,000 October 28 calls were opened. Trade-Alert suggests the higher-strike calls are being closed, while the lower strikes are being opened. If this is the case, it's possible an options trader is lowering their bullish expectations for Melco Resorts.

Today's call-skewed trading just echoes a broader trend in MLCO's options pits. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.17 ranks in the 4th annual percentile, meaning short-term speculators are more call-heavy than usual among options expiring in the next three months.

Elsewhere on Wall Street, there are signs of growing skepticism toward the casino stock. In fact, after holding near a record high in mid-May and early June, short interest has more than doubled to 3.13 million shares. These bearish bets still only account for just 1.2% of MLCO's available float, though.

Looking at the charts, Melco Resorts spent most of the past year in a strong uptrend, surging more than 68% from its August low south of $20 to its May peak near $33. However, the shares have been selling off since that recent top, likely due to increased selling pressure from shorts.

These bearish bettors are sidelined through the Fourth of July holiday, though, with the stock's 10.9% drop today earning it a spot on the short-sale restricted list. And based on its current perch, MLCO shares are also on track to close below their 320-day moving average for the first time since Dec. 20, 2016.

melco stock chart july 2

 
 

“Buy This Stock Now!” - Expert Who Called 11x On TSLA

He called a rare 11x on Tesla…

But now, thanks to Elon & Trump’s new alliance…

He says there’s a new opportunity that could be 1,000x BIGGER than Tesla – and it could completely revolutionize a $23 Trillion market.

It’s trading for less than $5 per share right now…

But it won’t be under the radar for long.

Discover The 1,000x Bigger Elon Opportunity Here

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

👀Learn How Dividends Create Passive Income for Life
Receive $200 Off Motley Fool Epic. The Motley Fool Epic $299 discounted offer is based on $499/year list price. Introductory promotion for new members only. Take control of your money and your portfolio with Motley Fool Epic.

💵New Income System Could Pay You $4,243 Monthly
You could collect an average of $4,243 per month starting as early as next week with a new payout system for income investors. New registrations are being accepted for investors who want to be in a position to start with their first payout next week.

🚀Easy 92% Crypto Dividends (No Coins Required)
COIN stock doesn't pay a dividend... But there's actually a new way to collect a massive dividend that's indirectly based on the stock and offers a terrific monthly income (currently yielding nearly 92% on a forward basis).

🤝Free Advisor Match with Wiseradvisor.com
Don't leave your retirement to chance! Get matched with a trusted financial expert for FREE and make the most of your tax refund. Get started now.

⚠️Dennis Quaid's #1 Warning for Americans
Here's the thing: life doesn't come with guarantees. The economy shifts, markets stumble, and years of hard work could slip through your fingers like sand. But it doesn't have to be that way for you. So request a free copy of this Gold & Silver Guide that will arrive right to your doorstep when you act now.

 

 
 

Follow us on X, Follow us on Twitter