NEW BEARISH Plays

Caesars Entertainment - CZR - close: 12.41 change: -0.18

Stop Loss: 13.25
Target(s): 10.10
Current Gain/Loss: unopened

Entry on February 13 at $--.--
Listed on February 12, 2013
Time Frame: Exit prior to earnings on Feb. 27th
Average Daily Volume = 1.3 million
New Positions: Yes, see below

Company Description

Why We Like It:
It looks like the bulls won the royal flush last week with a huge short squeeze in shares of CZR. Short interest was about 18% of the float. When news hit last week that New Jersey Governor Christie might consider allowing online gambling, the stock exploded. Mr. Christie actually vetoed the bill that would allow online gambling but suggested a few minor amendments before he would sign a new one. New Jersey is not the only state considering legalizing online gambling. Such a move could be extremely beneficial for the major players in the gambling industry. CZR sponsors the "world series of poker" which is definitely a brand they could capitalize on. Unfortunately, we think the move in CZR is too much, too soon and was probably exaggerated by a short squeeze when the stock broke through technical resistance at its simple 200-dma. The company has a huge amount of debt at more than $21 billion. CZR has consistently missed Wall Street's earnings estimates the last few quarters. We think this rally fades as bulls cash in their chips.

I am suggesting bearish positions immediately. We'll start with a stop loss at $13.25. Our target is $10.10.

Suggested Position: short CZR stock @ (the open)

- (or for more adventurous traders, try this option) -

buy the Mar $10 PUT (CZR1316o10) current ask $0.45

Annotated chart: