Call strategy bets on Las Vegas Sands
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the sale of 2,750 December 42.25 calls for $2 and the purchase of an equal number of June 55 calls for $0.96. Volume was below open interest in the December options but not the June calls, which indicates that an existing position was rolled from one contract to the other.
LVS rose 0.71 percent to $43.96 in afternoon trading, leaving those December 42.25 calls in the money. If the investor hadn't adjusted the position, he or she would automatically be required to buy shares in the casino operator at the end next week.
By rolling the position forward, the trader avoids that potential expense and gains an additional six months of upside exposure to the stock, albeit at a much higher price. He or she also collected $1.04 of income in the process.
The trader apparently believes that LVS could rally in the first half of 2013 but is also not willing to pay full price for the stock. The investor is essentially remaining long the name but with much less capital at risk. (See our Education section for more on how trading options can be safer than owning shares.)
The stock has been and been moving sideways since September but is now near the bottom of that range.
The Heat Seeker shows calls outnumbering puts by LVS by almost 2 to 1 so far today, which reflects the bullish tone in name.