Options Trading News

March 14, 2013  Thu 5:14 AM CT

Caesars Entertainment has huge opportunities in online gambling, and yesterday traders placed their bets.

The option paper was mixed, but optionMONSTER's Heat Seeker system detected unusual activity in the April 20 calls, which are well out of the money and were active late in the session. Buyers paid $0.35 and $0.40 for almost 1,500 of the contracts in volume that was well above the previous open interest of just 60 options, indicating new activity.

Those long calls lock in the price where investors can buy shares, so they can provide some nice leverage in the event of a continued rally. But they'll also expire worthless if it fails to move by mid-April. (See our Education section)

CZR leapt 8.79 percent to $15.60 yesterday. CEO Gary Loveman recently said the casino operator will benefit tremendously from the rise of online gaming, which could prosper because of a huge loyalty program with millions of members. There is also massive short position in the float, and the balance sheet is leveraged.

More than 11,400 options changed hands in the name yesterday, compared with about 1,500 in a typical session.

Disclosure: I own CZR calls.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »