Options Intelligence Report: Las Vegas Sands Corp. (LVS) & Exxon Mobil Corp. (XOM)
Bulls Stockpile Calls On Las Vegas Sands As Shares Hit New 52-Week High
LVS ñ Las Vegas Sands Corp.
Frenzied trading in Las Vegas Sandsí options ensued as shares of the operator of casino resorts jumped nearly 4.5% to reach a new 52-week high of $30.15. Bullish investors hoping to see the upward momentum continue are scooping up call options on the stock. As of 12:15 pm ET, more than 3.1 call options on LVS changed hands for each single put option traded. Trading traffic is heaviest in near-term in- and out-of-the-money calls.
Investors purchased approximately 12,500 now in-the-money calls at the August $30 strike for an average premium of $0.37 each. More than 20,500 calls changed hands at that strike by 12:40 pm ET, exceeding the 16,498 lots of previously existing open interest at that strike. Investors buying the contracts outright are poised to profit should Las Vegas Sandsí shares trade above the average breakeven price of $30.37 by August expiration.
Bullishness spread to the higher August $31 strike where traders picked up about 3,600 calls for an average premium of $0.105 a-pop. Call buyers make money if, by expiration day, the casino operatorís shares increase 3.2% to surpass the average breakeven price of $31.105.
XOM ñ Exxon Mobil Corp.
A three-legged bullish play on the oil and gas company this morning indicates one investor is preparing for the price of the underlying stock to climb higher ahead of October expiration. Exxonís shares rallied 1.70% to $60.90 by 11:50 am ET perhaps following the Federal Reserveís report of better-than-expected industrial production for the month of July. It looks like the bullish player initiated a risk reversal in conjunction with an added financing vehicle.
The trader shed 10,000 now in-the-money calls at the August $60 strike for an average premium of $0.73 each and sold 10,000 puts at the October $52.5 strike at a premium of $0.43 apiece in order to buy 10,000 calls at the October $62.5 strike for premium of $1.16 a-pop. The sale of the August $60 strike calls and the October $52.5 strike puts offsets the premium required to purchase the August $62.5 strike calls. The trader essentially put on the trade for free and is positioned to make money if Exxonís shares continue to rally in the next few of months.
The sale of the in-the-money call options at the August $60 strike may represent a calendar roll of the nearer-term lots up to the higher strike price in the October contract given the large amount of open interest at the August $60 strike. XOMís shares must increase at least 2.6% in order for the investor to start to amass profits above the effective breakeven price of $62.50 by October expiration. Options implied volatility on XOM fell 8.2% to 19.78% by 12:10 pm ET.
Note: The material presented in this commentary is provided forinformational purposes only and is based upon information that isconsidered to be reliable. However, neither Interactive Brokers LLC norits affiliates warrant its completeness, accuracy or adequacy and itshould not be relied upon as such. Neither IB nor its affiliates areresponsible for any errors or omissions or for results obtained fromthe use of this information. Past performance is not necessarilyindicative of future results.
This material is not intended as an offer or solicitation for thepurchase or sale of any security or other financial instrument.Securities or other financial instruments mentioned in this materialare not suitable for all investors. Any opinions expressed herein aregiven in good faith, are subject to change without notice, and are onlycorrect as of the stated date of their issue. The information containedherein does not constitute advice on the tax consequences of making anyparticular investment decision. This material does not take intoaccount your particular investment objectives, financial situations orneeds and is not intended as a recommendation to you of any particularsecurities, financial instruments or strategies. Before investing, youshould consider whether it is suitable for your particularcircumstances and, as necessary, seek professional advice.
View Andrew Wilkinson's post archive >