Entertainment venue operator Sphere Entertainment Co. (SPHR) is up just 10% over the past year, far underperforming the overall stock market. One trader sees a rally in the next two months.
That’s based on the February 2025 $40 calls. With 63 days until expiration, 5,945 contracts traded compared to a prior open interest of 191, for a 31-fold rise in volume on the trade. The buyer of the calls paid $3.70 to make the bullish bet.
Sphere recently traded for about $38, meaning the stock would need to rise by $2, or about 5.2%, for the option to move in-the-money. Sphere has twice seen shares hit the $50 range, and hit a 52-week high of $51.83, before pulling back.
The Las Vegas-based entertainment venue has just recently opened. Revenues are up 93% in its first year of operation, with over $1.1 billion in revenue. But overall, Sphere is still operating at a loss.
Action to take: Investors may like shares under $40, where they have built a base of support in the past.
Investors can look to take some profits in the $50 range, for about a 20% gain, to take advantage of what may be a normal trading pattern until the company shifts to profitability.
For traders, the February 2025 $40 calls are well positioned for a partial move higher from current prices over the coming weeks. Traders should look for mid-double-digit returns on the option trade.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.