MGM 2 Year Stall Coming To An End?

By Sang Lucci Uncategorized

By Sang Lucci

Whenever I’m flying into Vegas, the first building I look for is the MGM Grand. With it’s bright green fluorescent lights, and gold letting, this cross shaped structure stands smack dab in the middle of the boulevard and brings me back memories. If you plan on being rich and doing Vegas in style, I’d recommend checking out the Sky Lofts.

For swing traders, casino stocks are a tough trade. You only come to this group of names a few times out of the whole year for an attempt at profits. Intraday traders love the volatility but for the most part these stocks have been left behind as the market propels to heights never seen before. News floats around consistently about the health of the Macau gaming industry and subsequently that news is at the heart of most of the volatility in this sector. Las Vegas Sands and WYNN in years prior to 2015 were always heralded as the leaders. Now, it seems MGM has a shot at the top spot.

Last week casino stocks all gapped higher considerably off of a report on Macau gaming revenues. Las Vegas Sands actually busted a previous consolidation range around $52 and printed over $54. WYNN seems to be the dog of the sector, while MGM is left to tackle the $25 area. We’ve been monitoring the options and there was a previous buyer on the $25 October’s who may have gotten in too early but could still end up in the green.

We’re getting this option at a nice discount from what the options player paid for. On August 15th, the player paid $1.15 for 1522 contracts making the total cash outlay around $175K. This bet needs a move over $26 by expiration just to breakeven so they’ll need to see a solid rotation into this sector which they may still get.

Keep an eye on that $25 area and watch the tape on these casinos to see if a big move is on the horizon. We’ll continue to look for more options activity!

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About the Author

Sang Lucci

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Anand Sanghvi, aka "Lucci", is the founder and head trader at Sanglucci.com. Anand has successfully traded equities and options since 2006, beginning his career as a proprietary trader at PTG Capital. Anand was named head trader utilizing tape reading and options to make his plays. Anand left in 2009 to manage his own money and infamously turned $50,000 into over $2,400,000. He soon founded Sanglucci.com.

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