11:15am (EST)

Although the market is slightly higher this morning, it certainly looks like we are going to finish the week with a loss. The Dow is currently up 57 to 8,388 but will need to add another 200 points on top of that just to make it back to even for the week. I don’t see it happening but it is option expiration day for the May chain and anything is possible. However, I bet a cold soda we end the week down.

I haven’t been to active in trading this market because we knew it was due for a pause. Yes, we can play put options on the downside but I’m not so sure we go tremendously lower from here. So right now, the market is in transition and I like to wait things out if there is some uncertainty.

That doesn’t mean there aren’t trading opportunities and we have nibbled on a few plays this week. One more trade that I am looking to add is a casino trade, hence the title of today’s blog.

The casinos are getting another pop this morning and I have been mentioning Las Vegas Sands (LVS, $9.95, up $0.52) as a possible play. We put it on our Watch List if it fell under $10 and the trade was on Wednesday when the stock fell to a low of $8.45.

I have been getting emails from some of our readers who have been buying the June options. I had some of you tell me you bought May options and have made some money this morning but man that was a risky trade.

We were in and out of the June 15 calls (LVSFZ, $0.45, up $0.05) but when the stock fell below $10 on Wednesday, traders were buying the June 12.50 calls (LVSFC, $0.86, up $0.16) for under 50 cents. I’m not as high as I was on these call option trades, especially with the weekend coming up and if I we looking to get back in, I would look further out.

The Las Vegas Sands September 12.50 calls (LVSIC, $2.19, up $0.17) have a delta of .56 while the June 12.50 calls have a delta of .38. That basically means if LVS goes up $1, the June calls would go up in value by 38 cents while the September calls would go up 56 cents. The “Theo” (theoretical price) for the September 12.50 calls is $2.56 so we are not overpaying for this option.

You could set limit orders of $2.00 if you want to wait and see if LVS comes back down to you or you could enter limit orders to get in at $2.15-$2.20. If you get in at current levels, set stops at $1.00.

I’ll be back this weekend with a full update.

Rick Rouse
Rick@OptionsMentoring.com