Unusual Options Activity: Caesar’s Entertainment (CZR)

Shares of casino operator Caesar’s Entertainment (CZR) have been in an uptrend for the past few months, but have recently pulled back to the lower end of their trendline. One trader sees a continued move higher in the coming months.

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  • That’s based on the January 2022 $130 calls. Over 4,400 of the contracts traded against a prior open interest of 132, for a 33-fold rise in trading volume.

    With shares of the company around $100, it would take about a 30 percent move for this option trade to close in-the-money. The buyer of the call paid about $5.10.

    The overall move higher in Caesar’s is part of a reopening trade in the economy, with a rise in travel and tourism once again after over a year. In that timeframe, company shares have rallied 142 percent, beating the S&P 500 by over 100 points.

    That’s in spite of a company coming off some sizeable losses, although revenue and earnings growth have jumped in the most recent quarters.

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  • Action to take: Shares have traded as high as $113 in their current uptrend, so the current pullback, which has taken shares to about the 50-day moving average, looks attractive here. The company doesn’t pay a dividend, so traders can ignore shares.

    These January calls are relatively inexpensive compared to the price of shares, but could provide high-double to low-triple digit gains on a fast move higher in shares, even if they don’t clear the $130 strike price.


    Disclosure: The author of this article has no position in the stock mentioned here, but may trade this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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