Options Straddle Idea for Las Vegas Sands Corp. (LVS)

04/22/2010 12:01 am EST

Focus: OPTIONS

Las Vegas Sands Corp. (LVS) has not confirmed its next earnings announcement, but the market anticipates the report during the first week of May. Last quarter, the stock dropped 9% around its earnings announcement.

The quarter prior, the shares climbed 12% around earnings time. Do you think the stock will make at least that much again, but not sure which direction? Consider a long straddle from ONN.tv’s Idea Generating Platform (IGP) in the front month.

LVS Straddle Trade Details (at time of writing – adjust accordingly):

LVS is currently trading around $24.05

Long Straddle:

• Buy the May 24 call
• Buy the May 24 put
• Net debit of $3.10


Click to Enlarge

Profit/Loss Details

Maximum Profit: Maximum gain on this long straddle is theoretically unlimited if the stock climbs higher than $27.10, and is limited to the downside (but significant) if the stock drops to zero throughout the next 30 days.

Maximum Risk: Risk is limited to the premium paid, or $3.10 per straddle, if volatility comes in and the shares trade between the breakevens at May options expiration.

Upper Breakeven: $27.10 (the strike price plus the credit paid).

Lower Breakeven: $20.90 (the strike price minus the credit paid).

By the Staff at ONN.tv
Provided by the Idea Generating Platform at ONN.tv

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