Las Vegas Sands Corp. (NYSE: LVS) shares opened higher this morning on a New York Times story noting how gambling revenues for Las Vegas casinos are high this year, and "way up" in the past few weeks. The story cites casinos catering to affluent customers and foreign customers from countries with strong currencies as major reasons for the gambling boom this year. LVS stock is in the red now, but that move could be attributed to investors who bought the stock at its highs selling their positions to get the tax-loss this year. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on LVS.After hitting a one-year low of $71.24 in June, the stock hit a one-year high of $148.76 in October. LVS opened this morning at $107.85. So far today the stock has hit a low of $107.02 and a high of $110.45. As of 11:25, LVS is trading at $107.05, down $0.87 (-0.8%). The chart for LVS looks bearish and steady, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.
For a bullish hedged play on this stock, I would consider a February bull-put credit spread below the $80 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade could make a 6.4% return in just 7 weeks as long as LVS is above $80 at February expiration. Las Vegas Sands would have to fall by more than 20% before we would start to lose money.
LVS hasn't been below $80 since July and has shown support around $107 recently. This trade could be risky if the slowing economy starts to hurt casinos, but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is around $100 and rising.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in LVS.
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