Bulls hail Caesars as wagers pay off

Caesars Entertainment is making a comeback, doling out winnings on upside option positions.

On May 12, Investitute’s market scanners identified the purchase of 2,000 June $12 calls for $0.20 to $0.30 with shares around $11.20. Volume was far above the strike’s open interest, indicating that this was fresh buying.

Those calls ended today’s session trading at $0.63, doubling or tripling in value depending on the purchase price. The stock rose less than 11.2 percent in same timespan, highlighting the kind of leverage that can be achieved with options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

CZR jumped 7.79 percent to $12.45 today. The casino operator, which is expected to emerge from bankruptcy this year, has rallied in recent days with news including plans for a joint project with rival MGM Resorts in Atlantic City and regulatory approval from the Illinois Gaming Board for restructuring.