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Tuesday, September 15th, 2009
1:25pm (EST)
Casino stocks are getting another pop and I wanted to update a trade that profiled back in June. This trade was from June and was before our “official” launch so many of you new subscribers have not seen this one. DO NOT take this update as a new trade. In fact, it is being updated and closed today.
We have a lot of new faces and I wanted to walk everyone thru the trade to get a feel on how I look at things.
From June 24th:
“I’ve been talking about creating Watch Lists as a way to help you follow stocks and sectors. The Gambling/ Casino sector has been hit pretty hard and some of the star players in the industry are in the single-digits.
I like MGM the most out out of this group and just last July this was a $40 stock. Yes, we have a long way to go and sometimes I like to think outside the box. Yes, the sector has been punished and we all know MGM is not a $42 stock right now nor does it deserve to trade at that high of a multiple. However, it is dirt cheap.
This is not a trade recommendation but the July 6 calls (MGMGF, $0.95, up $0.45) are up over 50% today. What I’m LOOKING at are the January 2011 January 7.50 calls (VYGAU, $2.60, up $0.40) which do not expire for another 576 days! Folks, that is over a year-and-a-half away. I normally don’t buy LEAPs but here is one case where it might be worth a nibble. If MGM can make it to $20 by 2011, these calls will be worth at least $12.50.
Sometimes it is hard to keep you eye on the prize but a trade like that makes sense to me. Let’s say you are just starting options trading and you don’t have that much money to trade. If you had just $260 you could buy one contract of these call options and if MGM is at $20 by 2011 then you will have $1,250. That is what I mean when I say I’m “thinking outside the box”. (END)
Here was the Casino Watch List from June 24th as well:
“For this Watch List, you should include: Las Vegas Sands (LVS, $7.81, up $0.44), MGM Mirage (MGM, $6.56, up $0.72) and Wynn Resorts (WYNN, $35.28, up $1.29) are the main ones I watch. You could also add Boyd Gaming (BYD, $8.30, up $0.25) and Pinnacle Entertainment (PNK, $9.38, up $0.03).” (END)
Today’s stock prices: LVS, $19.22, up $1.16; MGM, $13.05, up $0.71; and WYNN, $71.06, up $1.95. Wow.
The MGM 2011 January 7.50 calls (VYGAU, $7.50, up $0.70) were at $2.60 and are up nearly 190%. Close at least half of the trade and set a stop of $5.20 on the other half.
I wanted to bring this up because it shows the importance of using these Watch Lists as a way to help you find and set up trades. Look, I get a lot of emails asking how I find trades and the best way I can explain is to create these Watch Lists. Once you see where the money is flowing you can go long (buy call options) in the sector that is hot or short (buy put options) the sector that is falling out of favor.
The market is holding its own…the Dow is up 43 to 9,670. The market is still following the road map we have sketched out over the short-term…
Rick@MomentumOptionsTrading.com
Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, options picks, options trading strategies, Pinnacle Entertainment, Wynn Resorts
Posted in Hot Stocks, Option Trades | Comments Off
Monday, November 10th, 2008
There seems to be no good news in site for the casino stocks. On October 23, I had mentioned that the sector has been battered and bruised and it’s unbelievable how low some of these stocks have gotten. We used the weakness to play a two-week rally and made some tremendous profits along the way.
Before the opening bell this past Monday, I had said to place stops on all of the casino plays as they had enjoyed a nice rally. Here is what I said before the opening bell: “If you are in any of these positions, scale back on the November calls by closing 50%-75% of your contracts and at least half of your January positions. The ride has been fun but you have to protect your profits and start preparing for the next trades.”
We used the current November call options and some January 2010 call options to play the rebound. The November calls are no good to us anymore because they expire in a couple of weeks.
The previous January 2010 call options I had mentioned are looking attractive again but we are going to have to be selective with a few of them.
Las Vegas Sands (LVS, $7.03, down $0.82) rallied from $8.57 on 10/23 to a high of $16.81 this past Monday. The November 10 calls (LJJKB, $1.00, down $0.40) went from 50 cents to $5 over the same time period and now look at them. The January 2010 10 calls (LNUAB, $3.50, down $0.50) were going for $2.20 and hit a high of $8.50 before falling back down with the stock. If you’ll notice, the 2010 calls are still higher than where they were originally profiled and that is due to the jacked-up volatility in the stock.
I had mentioned the huge short position in the stock and although there was a “short-squeeze” it looks as though the bears are targeting the stock once again. On Friday, the company said is seeking funding to help with some of its loans and that it has “substantial doubt” about its ability to survive. That smells like bankruptcy but doesn’t necessarily mean bankruptcy although those words in quotations would scare even the bravest souls.
Las Vegas Sands has some sweet properties (The Venetian, The Palazzo, The Sands Macao and The Venetian Macao in China) and it’s possible that their lenders will work with them. However, the near-term outlook is bleak for the company. The stock had been rebounding lately on hopes that a recovery was in the works, especially after the company’s CEO invested nearly $500 million of his own money.
Because of the near-term outlook, we may have to wait on the sidelines to see how this one plays out. However, one little nugget that I found that was interesting was the fact that the company still plans to move forward with the Singapore Marina Bay project. That statement leads me to believe that the company has an Ace up its sleeve.
If Las Vegas Sands can make it through this quarter, then we will see. I have a good feeling that someway, somehow LVS will come up with the cash it needs to continue its operations. The stock had a 52-week high of $123 and was above $150 before that and a low of $4.32. These are the risks and there was heavy buying in the near-term put options for Las Vegas Sands. The November 5 puts (LJJWA, $1.15, up $0.25) traded over 8,000 contracts on Friday. There may be an opportunity to make some money on the downside with LVS, but again, let’s see how this one shakes out. I’d rather go long when things improve instead of getting hit by a short-squeeze in case the company comes out an announces a new financing package. Keep the January 2010 calls on your Watch List.
As you can imagine, other casino stocks fell in sympathy with LVS. MGM Mirage (MGM, $12.32, down $0.99) hit a high of $17.28 on November 3 and held above $15 before tumbling by the end of the week. However, MGM has gone “all-in” as it has agreed to provide up to $1.5 billion to complete its joint venture CityCenter project if outside financing cannot be secured. The company priced $750 million of senior secured notes, which will help reduce liquidity worries but they are taking a huge gamble. I like them more than LVS. The November 10 calls (MGMKB, $2.75, down $1.05) went from $2 to nearly $7 and now they are back at $2. Forget about them now. The January 2010 10 calls (YDMAX, $5.75, down $2.25) soared from $4 to $10 and are back under $6. Let’s see if this one can come back to us and we will set “alerts” at $4.50. If the calls can get back down to this level we can keep lowering our entry price in hopes of finding a bottom.
Wynn Resorts (WYNN, $46.04, up $0.34) may be the “best-of-breed” out of all of the casino stocks and perhaps the most volatile. The stock went from $28 on October 28 and hit a high of $63 three days later. The November 40 calls (UWYKH, $7.30, down $0.60) were trading for $2.35 and hit a high of $19! The January 2010 40 calls (YPWAH, $15.70, down $0.10) could have been purchased for $10.20 and hit $23. Let’s target $10 again as an attractive entry point or we may go further out.
The rest of the group are also in survival mode but they don’t look as enticing as MGM and Wynn. Boyd Gaming (BYD, $5.21, down $0.15), Pinnacle Entertainment (PNK, $6.25, up $0.47) and Trump Entertainment (TRMP, $0.58, down $0.05) may have some value in them if they can survive and out of this group, I like Pinnancle the best. The company owns the high-end Lumiere in downtown St. Louis, Mizzo which should see a pick-up in traffic after voters repealed a loss limit law that prevented gamblers from losing no more than $500 in two hours.
We banked tremendous gains on some of these stocks and now that they are falling out-of-flavor with Wall Street again there is a chance they might test their 52-week lows. More bad news could be on the way Monday as well. October’s casino revenue numbers for Atlantic City come out and they are expected to be pretty nasty. September revenues were down 15%, the greatest monthly decline in the 30-year history of legalized gambling. A smoking ban hasn’t helped matters either but that could expire in a week or so.
As you can see, there are some land-mines planted in our field of dreams but the sector won’t stay down forever. Gambling is not going to go away and the stronger casinos will survive and thrive if they manage the current slump correctly. Keep an eye on the aforementioned January 2010 calls I have listed and the new target prices.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Boyd Gaming, Casino stocks, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, Trump Entertainment, Wynn Resorts
Posted in Sectors | No Comments »
Monday, November 3rd, 2008
The casino stocks powered higher again on Friday and are showing some good momentum right now. Wynn Resorts (WYNN, $60.40, up $13.90) kept the ball rolling by announcing good 3Q results despite lousy Las Vegas revenues.
The company reported a profit of $51 million, or $0.49/ share, up from $45 million, or $0.41/ share, a year ago. Revenue jumped nearly 18% to $769 million, helped by the surge of nearly 37% at the properties of Wynn Macau (China) which contributed $475 million. Overall, Wall Street had expected earnings of $0.59/ share on revenue of $747 million.
Although Wynn missed on their numbers, the conference call was upbeat, and again, the short positions in some of these stocks are huge. The call options for Wynn Resorts have exploded over the last few days and some of you have made some nice gains. The November 40 calls (UWYKH, $18.50, up $11.40) jumped another 160% while the January 2010 40 calls (YPWAH, $23.20, up $8.00) could have been purchased for $2.35 and $10.20, respectively. Obviously, the November calls have performed much better than the January 2010 calls but the longer-term calls were used as insurance in case the November calls didn’t go our way.
In other news, MGM Mirage (MGM, $16.46, up $1.09) priced $750 million of senior secured notes, which wil help reduce liquidity worries. The November 10 calls (MGMKB, $6.90, up $1.20) were profiled at $2.00 and have also been a huge winner for us. The January 2010 10 calls (YDMAX, $10.00, up $1.25) were going for $4.00 in my original write-up of the casino stocks and they have also done well.
Las Vegas Sands (LVS, $14.19, up $3.81) was perhaps the most heavily shorted stock of the group, and man, did we hit the jackpot with these call options. The November 10 calls (LJJKB, $5.00, up $2.40) were going for 50 cents, yes 50 cents, and are up 10-fold. The January 2010 10 calls (LNUAB, $8.35, up $2.75) were going for $2.20 and they are up nearly 300%. Wow.
Boyd Gaming (BYD, $6.80, up $1.05) also chipped in with some incredible returns. The November 5 calls (BYDKA, $2.25, up $1.00) were going for 20 cents and were up another 80% on Friday. The January 5 calls (WWAAA, $3.60, up $0.95) were going for $1.60 and have easily doubled.
Pinnacle Entertainment (PNK, $5.60, up $0.75) has also done well but I had mentioned that those options are thinly traded.
If you are in any of these positions, scale back on the November calls by closing 50%-75% of your contracts and at least half of your January positions. The ride has been fun but you have to protect your profits and start preparing for the next trades. These options may continue to do well and we will still enjoy even more gains if the casino stocks extend their rally this week.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, Wynn Resorts
Posted in Sectors, Stock Earnings, Watch Lists | No Comments »
Wednesday, October 29th, 2008
It was only a matter of time before the casino stocks got a lift. The sector has taken a beating as consumers continue to cut back on everything as the ongoing housing downturn, diminishing credit, rising food costs and recession worries continue. Gambling was taking a back seat to all of the aforementioned issues but not today.
Last Thursday I mentioned a slew of casino stocks that looked good for a trade as many of the stocks had fallen 50%-75% off their 52-week highs. The short sellers are in the market today buying back stock as many of them are getting “squeezed”.
A short squeeze happens when a stock starts to rise rapidly and the short sellers want to get out. Supply and demand comes into play when short sellers start to cover and for many of these casino stocks that is what appears to be happening. There was some good news that came out of the sector today which was enough for short sellers to start buying back the stock. The price of a stock can be pushed even higher if there aren’t enough shares to go around.
Here is the list from last Thursday with a few LEAP options I had mentioned. I have also listed some November options that did well today.
Las Vegas Sands (LVS, $8.91, up $3.96)
November 10 calls (LJJKB, $1.70, up $1.25, or 277%)
January 2010 10 calls (LNUAB, $4.60, up $2.39, or 108%) — these calls do not expire until January 15, 2010.
MGM Mirage (MGM, $13.75, up $3.42)
November 10 calls (MGMKB, $4.70. up $2.75, or 141%)
January 2010 10 calls (YDMAX, $8.50, up $4.40)
Wynn Resorts (WYNN, $41.05, up $8.17)
November 40 calls (UWYKH, $8.00, up $5.65, or 240%)
January 2010 40 calls (YPWAH, $15.20, up $5.00, or 49%)
Boyd Gaming (BYD, $5.63, up $1.25)
November 5 calls (BYDKA, $1.05, up $0.80, or 320%)
January 5 calls (WWAAA, $2.50, up $0.90, or 56%)
Pinnacle Entertainment (PNK, $4.42, up $1.67)
The trading volume for the options on Pinnacle are thinly traded, that is why I didn’t list them. The November calls for these stocks could trade higher by the time they expire and are worth a small gamble. However, I believe the January 2010 call options for these stocks are compelling.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, short squeeze, Wynn Resorts
Posted in Hot Stocks, Sectors | No Comments »
Thursday, October 23rd, 2008
There are so many sectors of the market that are making 52-week lows and the casino stocks are no exception. We made a Watch List for the sector back in June and at the time they were cheap. Guess what? Cheap has become cheaper. But it was hard to go long because of rising oil and food prices.
Although oil has backed off to under $70/ barrel and consumers are adjusting, more and more people seem to be saving cash. This has not helped the gaming industry and these stocks continue to suffer. In fact, I was shocked at how much they have fallen in four months. Here is today’s action versus where these stock were in June.
Las Vegas Sands (LVS, $8.57, down $3.13), was $54
MGM Mirage (MGM, $10.22, down $2.22), was $42
Wynn Resorts (WYNN, $40.34, down $6.04), was $92
Boyd Gaming (BYD, $4.13, down $0.72), was at $16 (buyout candidate?)
Pinnacle Entertainment (PNK, $4.04, down $0.48) was at $12
Trump Entertainment (TRMP, $0.64, unchanged) was at $3
Most of these stocks are 50%-80% off their highs. Unbelievable. I haven’t checked the gaming revenues in a few months and I’ll try to get to it over the weekend. The market always overshoots to the high side when things are robust and tends to go to extremes when things are crappy.
The gambling/ casino business is still a growing industry and new legislation is allowing more and more states to participate. Plus the market abroad has even bigger potential. Given the reduced stock prices and lowered expectations, this is one sector that may be worth looking into buying some LEAP call options.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, Trump Entertainment, Wynn Resorts
Posted in Company Commentary, Sectors | No Comments »
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Casino Stocks Continue Slide
Thursday, October 23rd, 2008
There are so many sectors of the market that are making 52-week lows and the casino stocks are no exception. We made a Watch List for the sector back in June and at the time they were cheap. Guess what? Cheap has become cheaper. But it was hard to go long because of rising oil and food prices.
Although oil has backed off to under $70/ barrel and consumers are adjusting, more and more people seem to be saving cash. This has not helped the gaming industry and these stocks continue to suffer. In fact, I was shocked at how much they have fallen in four months. Here is today’s action versus where these stock were in June.
Las Vegas Sands (LVS, $8.57, down $3.13), was $54
MGM Mirage (MGM, $10.22, down $2.22), was $42
Wynn Resorts (WYNN, $40.34, down $6.04), was $92
Boyd Gaming (BYD, $4.13, down $0.72), was at $16 (buyout candidate?)
Pinnacle Entertainment (PNK, $4.04, down $0.48) was at $12
Trump Entertainment (TRMP, $0.64, unchanged) was at $3
Most of these stocks are 50%-80% off their highs. Unbelievable. I haven’t checked the gaming revenues in a few months and I’ll try to get to it over the weekend. The market always overshoots to the high side when things are robust and tends to go to extremes when things are crappy.
The gambling/ casino business is still a growing industry and new legislation is allowing more and more states to participate. Plus the market abroad has even bigger potential. Given the reduced stock prices and lowered expectations, this is one sector that may be worth looking into buying some LEAP call options.
Rick Rouse
Rick@OptionsMentoring.com
Tags: Boyd Gaming, Las Vegas Sands, MGM Mirage, Pinnacle Entertainment, Trump Entertainment, Wynn Resorts
Posted in Company Commentary, Sectors | No Comments »