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November 26, 2012  Mon 12:15 PM CT

LVS: SEE CHART GET CHAIN FIND STRATEGIES
One investor is keeping the faith in Las Vegas Sands.

optionMONSTER's Heat Seeker trade scanner detected the purchase of 10,130 March 50 calls for $1.07. A matching number of December 48 calls were sold at the same time for $0.16 with volume below previous open interest. This suggests that an existing position was closed in the December 48s and rolled to the March 50s.

The investor paid $0.91 and now has an additional three months for the casino operator to rally. If the trade hadn't been adjusted, he or she would see those December long calls lose value at an accelerating pace as expiration approaches four weeks from now. (See our Education section)

LVS is off .38 percent to $44.01 in afternoon trading but is up almost 8 percent since the middle of the month, when it bounced at long-term support around $40. The company's last two earnings reports have missed estimates amid rising costs at its Chinese operations.

Total option volume is triple the daily average so far today, with calls outnumbering puts by 4 to 1.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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