Unusual Options Activity: Live Nation Entertainment (LYV)

Shares of event sales platform Live Nation Entertainment (LYV) have pulled back in recent weeks, likely due to a rise in Covid cases. One trader sees shares shaking off their recent fears and heading higher.

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  • That’s based on the January 2023 $95 calls. With 519 days until expiration, over 12,690 contracts traded against a prior open interest of 280 for a 45-fold surge in volume. The buyer of the calls paid about $11.25 to make the trade.

    Shares have pulled back to around $75 before starting a new uptrend recently. With shares around $80, they would still need to rise nearly 19 percent for this option to close in-the-money.

    Even with the recent pullback, the economy appears likely to remain far more open compared to that of early 2020. That may be why shares are still up about 61 percent in the past year, nearly double the return of the S&P 500 index.

    Action to take: While the company is still coming off an unprofitable period from the economic closures in 2020, shares are trending towards profitability, with a 578 percent surge in revenues this year compared to last year. That makes the possibility of a rally back to the 52-week high of $95 possible.

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  • For traders, these call options certainly offer the possibility of shares moving back to their old highs. With more than a year to play out, traders will get the best returns if shares surge even higher from there. Look to take some profits well before expiration, but this option could deliver triple-digit gains depending on how events unfold in 2022.

     

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