Entertainment Stock Could Deliver Win to Call Traders

The equity tends to move higher when short interest is on the rise

Subscribers to Schaeffer’s Weekend Trader options recommendation service received this LYV commentary on Sunday night, along with a detailed options trade recommendation — including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Shares of entertainment conglomerate Live Nation Entertainment (NYSE:LYV) just broke out from a downtrend on the charts, moving above the $88-$90 level that has acted as resistance since August. What’s more, after this breakout, the shares moved above the +20% year-to-date mark where they found support for two days last week. Now that a confluence of moving averages are moving higher to support price action, it looks like the ideal time to bet on LYV with calls.

There’s a large amount of calls falling off at the 90-strike for December expiration, which could also help send Live Nation Entertainment stock higher. What’s more, short interest is up 5.4% in the last two weeks and is continuing to churn higher. The shares sold short account for 8.02% of LYV’s total available float, and the equity tends to move higher when short interest is on the rise.

Options traders are pricing in low volatility expectations right now, meaning premium buyers can speculate for a steal. This is per the stock’s Schaeffer’s Volatility Index (SVI) reading that ranks higher than just 26% of annual readings. Our recommended February call has a leverage ratio of 8.3, and will double on a 12.4% pop in the underlying shares.