Trade of the Day: MGM Resorts International (NYSE:MGM)

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Casino stocks doing business in China finally caught an upgrade this week from Bank of America Merrill Lynch, but is the upgrade merely “peak optimism” in the sector? We wouldn’t go quite that far, but there are real problems in the group, and we do think that the upgrade is late to the game. Visits are up, but they were expected to be up quite a bit more this quarter.

The upgrade gave the casinos some breathing room, but once you add the negative industrial data from China into the mix, these stocks start looking overvalued. We recommend a bearish position on MGM Resorts International (NYSE:MGM) in anticipation that the stock will break support at $23 and head towards the May-June lows again.

‘Buy to open’ the MGM October 24 Puts (MGM161021P00024000) for a maximum price of $1.15.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/trade-day-mgm-resorts-international-nyse-mgm/.

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