10:45am (EST) I’ve been talking about creating Watch Lists as a way to help you follow stocks and sectors. The Gambling/ Casino sector has been hit pretty hard and some of the star players in the industry are in the single-digits. These stocks are getting a lift today and I was just thinking yesterday that they were getting “attractive” again. I’m not ready to go long the sector although I got some interesting ideas. For this Watch List, you should include: Las Vegas Sands (LVS, $7.81, up $0.44), MGM Mirage (MGM, $6.56, up $0.72) and Wynn Resorts (WYNN, $35.28, up $1.29) are the main ones I watch. You could also add Boyd Gaming (BYD, $8.30, up $0.25) and Pinnacle Entertainment (PNK, $9.38, up $0.03). I like MGM the most out out of this group and just last July this was a $40 stock. Yes, we have a long way to go and sometimes I like to think outside the box. Yes, the sector has been punished and we all know MGM is not a $42 stock right now nor does it deserve to trade at that high of a multiple. However, it is dirt cheap. This is not a trade recommendation but the July 6 calls (MGMGF, $0.95, up $0.45) are up over 50% today. What I’m LOOKING at are the January 2011 January 7.50 calls (VYGAU, $2.60, up $0.40) which do not expire for another 576 days! Folks, that is over a year-and-a-half away. I normally don’t buy LEAPs but here is one case where it might be worth a nibble. If MGM can make it to $20 by 2011, these calls will be worth at least $12.50. Sometimes it is hard to keep you eye on the prize but a trade like that makes sense to me. Let’s say you are just starting options trading and you don’t have that much money to trade. If you had just $260 you could buy one contract of these call options and if MGM is at $20 by 2011 then you will have $1,250. That is what I mean when I say I’m “thinking outside the box”. One interesting tidbit I have been hearing but need to do more research on is something I heard the other day. There seems to be a lawsuit concerning sports betting that would allow all 50 states rights the right to allow it or not. Can you imagine if this is ever approved? I don’t think it is a good idea because I think it would change sports and the way people would view the games. It will probably never happen anyway but this is news that could surface in the near future. Rick Rouse Rick@TheOptionInvestor.com]]>
