Mega-Cap Active Options Update: Call Selling in Las Vegas Sands (LVS)

Early reports out of Hong Kong indicate that the debut of Las Vegas Sands’ Macau unit were anything but auspicious; stateside, Las Vegas Sands (LVS) shares are dropping as a result. In late-morning action, LVS shares are down almost 4% at $15.19. The at-the-money December 15 straddle is trading for $1.99, compared to the December 16 straddle, which closed at $2.21 in Friday’s abbreviated session.

In options news, the LVS December 17.50 call is seeing some attention, as nearly 12,000 contracts have traded on the out-of-the-money option. Heading into today, this call was home to more than 42,000 open contracts. This call is now down 21 cents with the stock off 63 cents. Given the option’s delta of 23%, the call should have dropped just 15 cents, but selling pressure is pushing its value lower.

At 10:25 AM Eastern, one block of 7,202 contracts traded at 36 cents per contract, going off between the bid and the ask. It is possible these were sold to close given the pullback in LVS shares. They may also have been sold to open as a covered-call or buy-write strategy, providing a hedge for an investor who is long shares of LVS stock. Maximum risk for a covered call is the stock price minus the premium collected for selling the option. Potential profit is limited to the strike price minus the current stock price plus the credit collected.

Meanwhile, after weeks of slowing option volume in American International Group (AIG), the troubled, headline-grabbing name is seeing some attention once again. Implied volatility is on the rise as a result; the near-the-money December 30 straddle is priced at $4.75, compared to the December 33 straddle at Friday’s close, which traded for $3.69.

As Jud Pyle highlighted in today’s Sidewinder report, the December 25 and 30 puts have been active today. It appears as though an investor sold these put spreads (selling the 25 put and buying the 30 put) about 10,000 times even while the stock continues to pull lower in volatile trading. Currently, the stock is off almost 12% at $29.31.

Finally, also noted in today’s Sidewinder, General Electric (GE) has seen put selling activity at the March 13 strike. An investor sold roughly 10,000 of these out-of-the-money puts for about 40 cents each but will have to wait more than three months until March options expire to see if this modest credit can be counted as profit.