Unusual Options Activity: Las Vegas Sands (LVS)

Las Vegas Sands (LVS)

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  • Trader bets on current rally to continue.

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  • The May 2020 $70 call options on Las Vegas Sands (LVS) saw a 12-fold rise in volume, going from 812 open contracts to over 10,200.

    The bet, expiring in 114 days, is that shares will continue higher. And with LVS shares at $71 right now, the trade is already $1 in-the-money.

    The buyer paid about $4.65, or $465 per contract, so shares would need to be close to $75 to profit at expiration.

    Shares of the casino company are up nearly 30 percent in the past year, but slid over 4 percent on news of a new virus in China, which may weigh on casino tourism.

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  • Action to take: The pullback appears to be short-term in nature, so shares will likely recover from their recent one-day drop and move higher in the coming months.

    That makes the May call trade look like a good one to get into, and we like the relative safety of in-the-money trades. This trade will likely deliver mid-to-high double-digit returns, but could go as far as doubling if the rally picks up where it left off.

    Investors may like shares of the casino operator as well, although the valuation isn’t as good as it was six months ago before the run-up. The casino operator had flat earnings and revenue growth in the past year, but with all the trade uncertainty, those numbers are looking to pick up this year. Shares currently yield just under 4.2 percent, and they’re a buy up to $72.50.