Posts Tagged: mgm

Investment Strategy / Options / Stocks — Comments Off
7
Jan 10

Sold MGM Mirage Call Options at a gain of 55% in 8 days

mgm call optionsToday we sold our MGM Mirage (NYSE: MGM) February 2010 $11 call options at a gain of 55% within 8 trading days. This is our first trade close of the new year and we are happy to take a profit. This trade has worked out perfectly for us and exactly as planned. We had purchased the call options at a premium of $55 per contract and have sold it at a premium of $85 per contract today.

We are happy to make a gain of course. But we are also happy because we followed through with our overall trading discipline exactly on this trade. We got into the trade after seeing huge trading volume on the stock. We anticipated the reversal of fortunes (at least short-term) for MGM and decided to make the short term call option play. Now that the stock price has gone up modestly, the value of our call options have also appreciated. So, we did not wait even though there is still some time before the options expire. Tomorrow the momentum may take the stock price higher and perhaps we have left some money at the table. But the important thing is we have booked our profits.

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Investment Strategy / Options / Stocks — Comments Off
24
Dec 09

MGM Mirage short term Call Option trade

We are making a short  term call option move on MGM Mirage (NYSE: MGM). The stock price has been tremendously depressed and, looking at the call option buying action, seems like it is on a bounce back. The fundamentals of this casino company are not great and with a recession behind us the company has suffered. But just as all good things come to an end, all bad things also come to an end. The stock is down from its 52-week high of over $16 to around $9 at the time of this writing. A comparative chart analysis of the last 3 months with the S&P500 is given below.

MGMcart

But the biggest catalyst for our move is the fact that call option volumes went through the roof yesterday. One thing we have learnt from te market is to follow its trend. Do not fight it. For trading and making short term plays, that can be very profitable.

So, we are buying the February 2010 $11 call options at a premium of $55 per contract. Why did we select this call option? It gives us a little extra time for the trade to play out. The open interest on this call option is quite high (around 8,000 contracts) and that means we are assured of some trading in the option. Thirdly, the stock price is hovering around the $9.5 range. Even though, from a percentage perspective, we are expecting a stock price increase of over 10% in around 6 weeks, it seems like a reasonable figure.

Our expectation, as usual, is to generate a gain of 100% on the contract premium.

 

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