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Las Vegas Sands Lures Last-Minute Option Traders


Short-term skeptics are scooping up Las Vegas Sands' weekly 40-strike puts.

The shares of Las Vegas Sands Corp. (LVS) have surrendered more than 6% this week, and yesterday breached the $40 level for the first time since early October, extending their decline to five straight sessions. What's more, despite the stock's modest rebound this morning, it looks like a handful of last-minute option bears are betting on more downside for Las Vegas Sands today.

In early action, the gambling guru has already seen around 5,400 puts cross the tape -- about 20% higher than its average intraday put volume. Garnering noteworthy attention has been the weekly 40-strike put, which has seen close to 1,500 contracts change hands on open interest of fewer than 1,150, pointing to some new initiations. Plus, 66% of the weekly puts have traded at the ask price, suggesting they were bought. By purchasing the puts to open, the speculators are expecting Las Vegas Sands to extend its retreat beneath the $40 level in today's session, which represents the options' short shelf-life.

During the past several sessions, demand for Las Vegas Sands' short-term options has been on the rise, as evidenced by the stock's ascending Schaeffer's Volatility Index (or SVI). However, the SVI of 39% stands higher than just 19% of all other readings of the past year, suggesting the equity's near-term options are still relatively inexpensive at the moment.

Looking at the broader sentiment backdrop, we find that today's influx of pessimistic positions runs counter to the collective opinion among the brokerage bunch. Currently, Las Vegas Sands boasts 16 "strong buys" and two "buy" endorsements from analysts, compared to three lukewarm "holds" and not a single "sell" or worse suggestion. Likewise, the consensus 12-month price target of $59.58 represents a premium of 52% to Las Vegas Sands' closing price of $39.18 on Thursday.

On the charts, analysts' adoration of Las Vegas Sands seems somewhat out of place. The stock has given up more than one-third of its value since skimming the $62 level in mid-May, pressured lower beneath its 10-day and 20-day moving averages. Should the security continue its longer-term downtrend, an unwinding of optimism in the form of downgrades and/or price-target cuts could exacerbate Las Vegas Sands' technical troubles of late.

This article by Andrea Kramer was originally published on Schaeffer's Investment Research.

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