Caesars Stock Sees Increased Options Activity
Growth stocks have rallied in recent days amid speculation that the Federal Reserve could cut interest rates as early as the first quarter of 2024, with gaming stocks also joining the positive trend. Caesars Entertainment Inc. (NASDAQ: CZR ) is also getting in on the action, and options traders are watching the trend.
Caesars shares rose 2.86% in late trading, extending weekly gains to 11.55%, also forcing options traders to participate in contracts tied to the Flamingo operator's stock. Options activity in the gambling space was unusually high on Thursday, although the cause is unclear.
Caesars Entertainment was pushed into the options trading market today, with 49,000 calls and 15,000 puts traded to date, equivalent to 23 times current volume. The most popular is the $55 strike call on January 19, 2024, which opens a new position,” according to Schaeffers Investment Research.
Interestingly, the January $55 strike price is popular among options traders. In order for these market participants to realize profits on these contracts, Caesars stock price would have to rise above $55 by the close of trading on January 19th. The stock is currently trading at just over $48, meaning options traders are betting on a sharp rise in the near term.
Caesar Option Activity Notes
Caesars tends to be a favorite target among options traders due to its status as a growth stock and its tendency to make the occasional big, event-driven move.
As a result, the options market can provide valuable insights into the short-term performance of the online sports betting provider's stock. This may be happening.
A call option is an options contract that a trader purchases when he or she is confident that the value of the underlying security will increase. A put option is purchased in anticipation that the price of the security will fall. In other words, the data cited by Schaefer suggests that Caesars Options is clearly bullish in its positioning.
Caesars shares have gained 15.73% year to date, lagging the S&P 500's 23.18%. The Horseshoe operator reduced its outstanding liabilities to $12.45 billion as of Sept. 30, compared with $13.08 billion at the end of 2022. These continued debt reduction efforts may bring joy to investors who have long been worried about Caesars' debt balance.Face more headwinds than tailwinds.
Spike meets a challenge
While the catalyst for Thursday's surge in options activity at Caesars is difficult to pinpoint, it's safe to say that options buying is on such a strong upward trend as the gaming company faces some challenging headlines.
Specifically, J.P. Morgan analyst Joseph Grave lowered his price target on Caesars to $55 from $60, but maintained an "overweight" rating on the stock. TD Cowen subsequently cut its price target on the Cromwell operator to $63 from $76, although the bank also maintained an "overweight" rating on the stock.
Looking ahead to 2024, sell-side analysts have expressed their preference for Macau Operator among casino stocks. They noted that domestically focused gaming companies could come under pressure if consumers spend less on consumer discretionary goods. In this scenario, Caesars would be vulnerable because it is almost entirely focused on the domestic market.
Read also:
- Blackjack Casino Advantage: How to Beat the Odds
- Football 101: What is relegation in football?
- Family of woman who died while playing slot machines sues Wynn Las Vegas
- Passengers at Harry Reid Airport have to deal with strong winds causing flight delays
Source: www.casino.org
