EOT Trade Alert – January 5, 2010
January 5, 2010
Trade Alert:
Buy LVS March 2010 $19 Calls at $1.50 or better
Company Background:
Las Vegas Sands (LVS) operates hotel and casino resorts worldwide. The majority of its operations are in Las Vegas, Nevada and Macau, China.
Short-Term Catalyst:
The gambling industry and LVS have had a few rough years to say the least.
Back in October of 2007, LVS was trading for as much as $148. Then the financial crisis and recession that followed brought the company to the verge of bankruptcy. Shares plummeted to $1.38 per share by March of ’09. That’s a loss of 99%!
LVS rebounded from the March lows as the company restructured its massive debt load. By September of last year, LVS had reached $20. But in the three months since, the big money hasn’t been interested in the gambling industry… until now.
The big money is moving into gambling stocks and LVS in particular. You can see this from the recent jump in volume.
It’s no secret that casinos and resorts are highly sensitive to the economy. As the economy improves, the gambling industry is poised to charge higher.
Now industry analysts are jumping on the bullish train. They are increasing price targets and increasing earnings outlooks.
The aspect I like most about LVS is their Macau resorts. LVS has a big presence in Macau that’s sure to benefit as the Chinese economy heats up.
On a technical basis, LVS looks like it’s primed to fly. In the last two days, LVS broke through its three month downtrend on high volume. This is a great sign the breakout is for real and has plenty of room to run.
Let’s piggy back the big boys as they rotate money into the gambling industry.
Trade Details:
| Underlying Stock Symbol: | LVS |
| Current Bid-Ask Price: | $1.38 – $1.41 |
| Option “Buy Up To” Price: | $1.50 |
| Break-Even On Stock At Expiration: | $20.50 |
| Maximum Risk Per Contract: | $150 |
Exit Strategy:
LVS is trading at $17.93 per share. Resistance levels will be at $21 and again at $25. Remember, we want this stock to move higher. Support levels will be at $15 and $13. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.
Chart:
Category: EOT Trade Alert
