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LVS LEH

New Calls

Las Vegas Sands - LVS - close: 40.31 chg: +1.31 stop: 36.99

Company Description:
Las Vegas Sands Corp. is a hotel, gaming, resort and exhibition/convention company headquartered in Las Vegas, Nevada. The company owns The Venetian Resort Hotel Casino and the Sands Expo and Convention Center, where it hosts exhibitions and conventions, in Las Vegas and the Sands Macao in the People's Republic of China Special Administrative Region of Macao. The company is also developing additional casino hotel resort properties, including The Palazzo Resort Hotel Casino in Las Vegas and The Venetian Macao Casino Resort in Macao. (source: company press release or website)

Why We Like It:
Adding a new bullish play with the major market averages poised for more profit taking seems rather risky in our book. We find it appropriate that this stock is a casino. Overall the casino stocks have been showing decent relative strength. It is relative strength that draws our attention to LVS. The stock has managed to push to new three-month highs on a day most of the market was trading lower. More importantly LVS has broken through round-number, psychological resistance at the $40.00 mark and technical resistance at its 100-dma and its exponential 200-dma. The P&F chart shows a fresh double-top breakout buy signal that points to a $49.00 target. We are going to suggest calls with LVS above the $40.00 level. Our target will be the $44.50-45.00 range but keep in mind our time frame is pretty short. LVS is due to report earnings on August 3rd and that doesn't give us a lot of time. Any lack of follow through on today's breakout may be a good signal to abandon bullish positions.

Suggested Options:
We are suggesting the August calls since we plan to exit before the August 3rd earnings.

BUY CALL AUG 40.00 LVS-HH OI=2525 current ask $1.75

Picked on July 21 at $ 40.31
Change since picked: + 0.00
Earnings Date 08/03/05 (confirmed)
Average Daily Volume = 934 thousand
 

New Puts

Lehman Brothers - LEH - cls: 105.13 chg: -1.97 stop: 108.01

Company Description:
Lehman Brothers, an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The Firm is headquartered in New York, London, and Tokyo and operates in a network of offices around the world. (source: company press release or website)

Why We Like It:
If the new call play in LVS isn't risky enough for you take a look at this put play in LEH. The stock has been a pillar of strength in the market and in its own industry group. Shares of LEH have produced a string of new all-time highs and helped lead the XBD broker-dealer index to its own series of new highs. So why buy puts on a stock that is looking so strong? We believe that LEH is way overdue for some profit taking. The rally in LEH is about nine-weeks old and nothing goes up in a straight line. We want to reiterate that this is a speculative play and carries a higher degree of risk. Our strategy is to try and catch the next bout of profit taking. With the major indices still overbought and looking poised for more weakness we feel odds are leaning toward a consolidation in LEH too. Plus, the action over the last three days looks like a potential bearish reversal pattern. We're basically betting that LEH will pull back toward the $100.00 region before the August $100 puts expire on August 19th. Our official target will be the $100.50-100.00 range. Any dip toward the $100 level should significantly raise the value of the AUG 100 puts currently trading in the $0.50-0.60 range. Our stop loss at $108.01 (above yesterday's high) is superficial. If LEH trades to a new high our puts will probably be close to worthless. More conservative traders may want to pass on this play or wait for LEH to trade under the $105 level first. The biggest challenge we see is the $102.50 level where we expect bulls to try and defend the stock and buy the dip.

Suggested Options:
This is a speculative play on the August 100 puts.

BUY PUT AUG 100.00 LES-TT OI=2106 current ask $0.60

Picked on July 21 at $105.13
Change since picked: - 0.00
Earnings Date 06/14/05 (confirmed)
Average Daily Volume = 2.7 million
 

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