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Bull Call Spread Sees Strong Rally In Las Vegas Sands Corp. Shares In 2012

Posted on the 23 December 2011 by Phil's Stock World @philstockworld

Today’s tickers: LVS, MNTA, CHS & KLIC

LVS - Las Vegas Sands Corp. – Bullish action in Las Vegas Sands call options this morning indicates one strategist is betting shares in the casino resort operator will rally sharply in the first couple of months of 2012. Shares today rose 1.15% to $43.24 by 12:45 PM in New York, on the final trading session before the Christmas holiday. The investor positioning for big gains in the price of the underlying next year purchased a bull call spread, buying 2,000 calls at the Feb. 2012 $46 strike, and selling the same number of calls at the Feb. 2012 $50 strike, all for a net premium outlay of $1.05 per contract. Profits are available on the spread in the event that shares in LVS climb 8.8% to top the effective breakeven price of $47.05 at expiration. The bullish player may walk away with maximum potential profits of $2.95 per contract as long as the casino resort company’s shares jump 15.6% to settle above $50.00 at expiration in February. Las Vegas Sands Corp.’s shares last traded above $50.00 back on September 21, but haven’t closed above $50.00 since February 3, 2011. The call spread may be the trader’s limited-risk, limited-reward play on the stock ahead of its fourth-quarter earnings report on February 2, 2012. A positive surprise from the Company may result in substantial profits to the call-spreader should shares in LVS move up toward the $50.00 level.

MNTA - Momenta Pharmaceuticals, Inc. – Shares in the biotechnology company moved up 7.0% overnight to $18.20 ahead of a 10:00 AM EST conference call held to discuss the recently announced collaboration with Baxter International, Inc. to develop and commercialize products called biosimilars. Baxter will reportedly pay Momenta Pharmaceuticals $33 million in cash up front and may make additional payments in years to come. Put activity on Momenta may be the work of one trader locking in the rally in case the stock should pull back in the first few months of 2012. MNTA reports fourth-quarter earnings on February 9 of next year. The investor appears to have purchased around 1,600 puts at the Mar. 2012 $17 strike for an average premium of $1.38 each. The investor may profit at expiration if shares in the biotech company slide 12.0% from the current price of $17.74 to breach the effective breakeven point at $15.62. The strategist could be utilizing the put options to hedge a long position in the underlying, or if they hold no MNTA stock, may be outright bearish on prospects for Momenta’s share price performance in the first quarter.

CHS - Chico’s FAS, Inc. – Call options on specialty retailer Chico’s are attracting buyers this morning on the heels of a story that suggested the Company may be an attractive target for private equity firms. Shares in the seller of private branded clothing and accessories rallied 6.05% to $11.19 by 11:30 AM in New York. Chico’s calls were also active on Thursday, with the largest single trade taking place out in the May 2012 contract, where around 2,570 calls were likely purchased at an average premium of $1.14 each. Investors today traded more than three times as many calls on the retailer as changed hands on the stock yesterday. Strategists populating the Jan. 2012 and Feb. 2012 expiries scooped up in- and out-of-the-money calls to position for shares to extend gains in the first couple of months of the New Year. Call volume in the front month is heaviest at the Jan. 2012 $11 strike where some 2,300 in-the-money calls changed hands at an average premium of $0.40 each. Meanwhile, the $11 strike calls expiring in February were purchased more than 600 times for an average premium of $0.81 a-pop. Investors eyeing sharper gains in the stock come February expiration purchased more than 930 call options up at the $12 strike for an average premium of $0.29 per contract. Investors long the higher-strike calls stand ready to profit should shares in CHS surge 9.8% to exceed the average breakeven price of $12.29 by expiration day. Shares in Chico’s last closed above $12.29 back on November 8.

KLIC - Kulicke & Soffa Industries, Inc. – The manufacturer of equipment used to create semiconductor devices popped up on our ‘hot by options volume’ market scanner this morning after one strategist initiated a bullish bet in February 2012 contract call options. Shares in Kulicke & Soffa Industries rose 1.2% to stand at $9.37 in early-afternoon trade. It looks like the investor responsible for generating nearly all of the volume in KLIC options today purchased roughly 1,000 calls at the Feb. 2012 $10 strike for an average premium of $0.50 each. The February expiry calls may be a way for the trader to gain upside exposure on the stock ahead of the company’s January 31, 2012, first-quarter earnings report. Profits may be available on the position if shares in the name climb 12.0% to exceed the effective breakeven point at $10.50 by February expiration.

Caitlin Duffy
Equity Options Analyst

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Bull Call Spread Sees Strong Rally In Las Vegas Sands Corp. Shares In 2012
Bull Call Spread Sees Strong Rally In Las Vegas Sands Corp. Shares In 2012
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