Casino operator Caesars Entertainment (CZR) is down over 20% in the past year, with shares down 5% on Monday alone. One trader sees the stock rebounding in the coming weeks.
That’s based on the August 16 $35 calls. With 44 days until expiration, 8,183 contracts traded compared to a prior open interest of 141, for a 58-fold rise in volume on the trade. The buyer of the calls paid $4.00 to make the bullish bet.
Caesars shares recently traded for about $37.75, meaning the option is already $2.75 in-the-money. Shares are near their 52-week low of $31.74, and have been trending higher over the past month.
While tourism and travel has been booming, revenues are down 3% and Caesars over the past year. And the company has seen no earnings growth.
However, shares trade at about 0.75 times their price to sales, and shares trade at 11 times earnings.
Action to take: The stock likely got too oversold last month, and the new uptrend underway is likely to continue in the coming weeks, even with the occasional setback. Traders can likely see low-double-digit gains from here in the months ahead.
For traders, the August $35 calls are well positioned for further gains in the coming weeks. More speculative traders could look for an option out-of-the-money, as it could cost less to get into a trade and provide a higher percentage return.
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.