1:25pm (EST) Casino stocks are getting another pop and I wanted to update a trade that profiled back in June. This trade was from June and was before our “official” launch so many of you new subscribers have not seen this one. DO NOT take this update as a new trade. In fact, it is being updated and closed today. We have a lot of new faces and I wanted to walk everyone thru the trade to get a feel on how I look at things. From June 24th: “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. 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”. (END) Here was the Casino Watch List from June 24th as well: “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).” (END) Today’s stock prices: LVS, $19.22, up $1.16; MGM, $13.05, up $0.71; and WYNN, $71.06, up $1.95. Wow. The MGM 2011 January 7.50 calls (VYGAU, $7.50, up $0.70) were at $2.60 and are up nearly 190%. Close at least half of the trade and set a stop of $5.20 on the other half. I wanted to bring this up because it shows the importance of using these Watch Lists as a way to help you find and set up trades. Look, I get a lot of emails asking how I find trades and the best way I can explain is to create these Watch Lists. Once you see where the money is flowing you can go long (buy call options) in the sector that is hot or short (buy put options) the sector that is falling out of favor. The market is holding its own…the Dow is up 43 to 9,670. The market is still following the road map we have sketched out over the short-term… Rick@MomentumOptionsTrading.com]]>
