Options Action Bets on Las Vegas Sands
Las Vegas Sands just announced new cutbacks and 11,000 layoffs, but the beaten-down casino operator may finally be ready for a bounce.
OptionMonster's Heat Seeker system, which tracks unusual options activity, shows more than 22,000 calls trading against 5,000 puts in LVS. The call activity already exceeds yesterday's action, and both are nearly 10,000 contracts more per day than LVS traded in the previous 30 days.
Earlier Thursday, Las Vegas Sands said it is suspending construction on several multibillion-dollar projects in Macau as it reportedly seeks to raise up to $2 billion to finance the work. But Bank of America apparently believes that things can't get much worse for the company and raised its LVS recommendation to "neutral" from "sell."
- Who Owns LVS Shares?
- LVS Performance vs. Peers
The Wall Street Journal estimates that Macau is the source of 69 percent of the company's revenue and therefore has an unusually severe impact on its business in economic downturns. If the stock does rebound, it would come none too soon: LVS shares have plummeted 96 percent in the last year, from a high of $123 to around $5 today, as of this writing.
Do I think LVS screams back to $12, where it was Nov. 5, or $16, where it was Nov. 3? No, but after its harsh and protracted selloff, LVS may indeed be ready for turnaround.
We would consider buying the December 7.50 calls for $0.80, as 11,300 of those contracts hit in the first three hours of trade. The open interest at the December 7.50 call strike was a mere 4,100 contracts.
Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.
Las Vegas Sands Rivals:
- Wynn Resorts
- MGM Mirage
- Boyd Gaming
- International Game Technology