Investors in Caesars Entertainment, Inc. (NASDAQ:CZR) Stocks need to be watched closely based on the moves in the options market lately. That’s because the $23 call option expiring on January 17, 2025 had one of the highest implied volatilities of all equity options today.
What is implied volatility?
Implied volatility shows how much movement the market expects in the future. Options with high levels of implied volatility suggest that investors in the underlying stock are expecting a big move in one direction or another. It could also mean that an event is coming that may cause a big rally or a big sell-off. However, implied volatility is only one piece of the puzzle when it comes to putting together an options trading strategy.
What do analysts think?
Clearly, options traders are pricing in a big move for Caesars Entertainment stock, but what is the fundamental outlook for the company? Caesars Entertainment currently has a Zacks Rank #5 (Strong Sell) in the Leisure & Recreation Services industry which ranks in the bottom 31% of our Zacks Industry Rank. Over the past 60 days, no analysts have raised earnings estimates for the current quarter, while one has lowered them. The net effect has pushed our Zacks Consensus Estimate for the current quarter from 24 cents per share to 19 cents in that period.
Given the opinion that analysts have on Caesars Entertainment right now, this huge implied volatility could mean that a trade is developing. Often, options traders look for options with high levels of implied volatility to sell at a premium. This is a strategy that many experienced traders use because it captures the downside. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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‘This article may contain information published by third parties, some details of this article were extracted from the following source: markets.businessinsider.com’
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