27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Notable short seller Jim Chanos, the founder and President of Kynikos Associates, told CNBC's Sara Eisen in an interview Thursday he has been short casino operators Las Vegas Sands Corp. (NYSE:LVS) and Wynn Resorts, Limited (NASDAQ:WYNN) since the summer.
What Happened
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Speaking to CNBC's Eisen from the sidelines of the Yale CEO Summit, Chanos, a longtime bear on China, said he identified a short opportunity in American casino operators with operations in Macau.
U.S. operators with exposure to the region trade at a premium valuation compared to Chinese operators, Chaos said. Due to the ongoing trade war and geopolitical tension between the U.S. and China, this premium valuation "doesn't make a lot of sense right now," he said.
Why It's Important
American operators need to renew their gaming licenses with Chinese authorities as early as next year, as licenses expire in 2020 and 2021, Chanos said. Unfortunately for American operators, the Chinese government "holds all of the cards" in negotiations and has the power to "put these guys out of business if they want with no recourse," he said.
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This may be especially concerning for Las Vegas Sands, which is run by Sheldon Adelson, a close ally and large donor to President Donald Trump, Chanos said.
What's Next
Looking forward, Chanos said he doesn't know how much more downside casino stocks have, but he will continue following the news.
Related Links:
Wynn Shares Are Folding After A Mixed Q3 Print
'Distinctly Positioned' Las Vegas Sands Is Morgan Stanley's Top Gaming Pick
Photo by John Hill/Wikimedia.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.