It's been a tough week for casino stocks; shares of Wynn, MGM and Las Vegas Sands fell 8, 7 and 4 percent, respectively, in the past five trading sessions. But according to one trader who relies heavily on both the charts and option, it might be time to double down on one name in particular: MGM.
"MGM has pulled back to its 100- and 50-day moving average," said Keene on Friday's "Trading Nation." According to Keene, those levels should act as support and a good entry point. "I think there's opportunity to buy this pullback for upside to $26.50 per share."
The technical level coincides with some recent bullish activity in the name, as well.
"There's been a lot of institutional call buying in MGM this week," noted Keene. When traders buy calls, they are making a bullish bet that a stock will go higher. And according to Keene, there were three large trades that raised his eyebrows. "Thursday saw a large lot of buyers of the May 23-strike calls and [Friday] we saw buyers of the May 22 and 22.50-strike calls." These are bets that MGM will rise above $23, or 6 percent higher in the next month.
So to make his play, Keene followed suit and purchased the May 23-strike calls for 45 cents each, a trade that is profitable That's a bet that MGM will rally above $23.45 by May expiration.
"Strong institutional order flow combined with the charts makes this a great opportunity to profit from a potential rally in MGM."
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