Casino operator Las Vegas Sands (LVS) is up 30 percent over the past year, even as shares have come well off their 52-week highs. One trader is making a high probability bet shares will trend higher.
That’s based on the March 2024 $40 calls. With 142 days until expiration, 43,033 contracts traded compared to a prior open interest of 172, for a massive 250-fold rise in volume on the trade. The buyer of the calls paid $8.40.
Shares recently traded close to $46.50, making the options about $6.50 in-the-money. That leaves just $2.00 in time premium on the option. Las Vegas Sands is well off its 52-week high of $65.58, set back in May.
Operationally, the company has been faring well. Revenues are up 179 percent. And LVS was profitable in the most recent quarter, giving the stock a forward PE ratio of 15.
Action to take: With its current valuation, shares are a reasonable buy here. Las Vegas Sands also pays a dividend yield of 0.9 percent, and is about to trade ex-dividend on November 6.
For traders, the March $40 calls are well priced for being so far in-the-money.
A rally in shares should lead to mid-to-high double-digit returns with low downside risk. Traders may want to take quick profits on a year-end rally rather than hold too far into 2024.
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 of the companies mentioned in this article.