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News of a jump in Nevada gambling revenue and optimism about the possibility of legalized online gambling in New Jersey had boosted the share prices for casino companies on February 8, 2013. Some other gaming stocks are also benefiting from the increasing revenue in Macau. In this article, 4 gaming related stocks will be presented which are gaining positive momentum with unusual daily call options volume ratios. Unusual option activities can also be an indicator or precursor of a major movement for the underlying stock.

MGM Resorts International

MGM Resorts International (MGM) is a hospitality company, engaging in operation of casino resorts, which includes offering gaming, hotel, convention, dining, entertainment, retail and other resort amenities. MGM has two segments that are based on the regions, in which it operates: wholly owned domestic resorts and MGM China. MGM closed at $13.51 with 4.40% gain on February 8, 2013 and had a daily call volume ratio of 2.26. MGM had been trading in the range of $8.83-$14.94 in the past 52 weeks. MGM has a high beta of 3.68.

Fundamentally, MGM has an enterprise value of $17.59B with a market cap of $6.61B. MGM has a total cash of $2.56B with a total debt of $13.83B. MGM generates an operating cash flow of $1.08B with a levered free cash flow of $782.43M. MGM has an operating margin of 9.53% and a negative profit margin of -7.47%. MGM has a negative return on equity of -4.66%.

Technically, the MACD (12, 26, 9) is showing a slightly bearish trend, but the MACD Histogram is decreasing and could signal a bullish sign when turning positive. The momentum indicator, RSI (14), is indicating a strong buying momentum at 8.87. MGM is currently trading above its 50-day MA of $12.03 and 200-day MA of $10.97, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

Melco Crown Entertainment Ltd

Melco Crown Entertainment Ltd (MPEL), through its subsidiary Melco Crown Gaming (Macau) Limited, is an operator of casino gaming and entertainment resort facilities focused on the Macau market. Melco Crown Gaming is licensed, through concessions or subconcessions, to operate casinos in Macau, including City of Dreams, Altira Macau, Mocha Clubs and Taipa Square Casino. MPEL closed at $20.88 with 6.37% gain on February 8, 2013 and had a daily call volume ratio of 3.51. MPEL had been trading in the range of $9.13-$21.48 in the past 52 weeks. MPEL has a high beta of 2.06.

Fundamentally, MPEL has an enterprise value of $12.26B with a market cap of $11.46B. MPEL has a total cash of $1.71B with a total debt of $3.19B. MPEL has an operating margin of 12.44% with a profit margin of 10.23%. The return on equity is 11.51% for MPEL.

Technically, the MACD (12, 26, 9) indicator is showing a bearish trend; however, the MACD difference is converging. RSI (14) is picking up with buying momentum at 63.04. MPEL is currently trading above its 50-day MA of $17.96 and 200-day MA of $13.87, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

Zynga Inc.

Zynga (ZNGA) is a leading provider of social game services with 240M average monthly active users over 175 countries. In late November, 2012, Zynga and Facebook (FB) loosened terms of longstanding alliance. Zynga no longer has the preferential treatment on Facebook, but Zynga is now able to market its games to the world outside of Facebook, opening up more revenue opportunities and venturing into higher margin markets. ZNGA closed at $3.43 with 11.00% gain on February 8, 2013 and had a daily call volume ratio of 3.61. ZNGA had been trading in the range of $2.09-$15.91 in the past 52 weeks.

Fundamentally, ZNGA has an enterprise value of $1.20B with a market cap of $2.65B. ZNGA has a total cash of $1.28B with a small total debt of $100M. ZNGA generates an operating cash flow of $195.77M with a levered free cash flow of -105.70M. ZNGA has a negative profit margin of -16.45% and a negative operating margin of -6.83%. ZNGA's ROE is -11.72%.

Technically, the MACD (12, 26, 9) indicator is showing a bullish trend with diverging MACD difference. RSI (14) is indicating a strong buying momentum at 73.69, where above 70 is considered as over-bought. ZNGA is currently trading above its 50-day MA of $2.53 and 200-day MA of $3.86, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

Boyd Gaming Corporation

Boyd Gaming Corporation (BYD) is a multi-jurisdictional gaming company, operating 16 wholly owned gaming entertainment properties and one controlling interest in a limited liability company. It has gaming operations in Nevada, Illinois, Louisiana, Mississippi, Indiana and New Jersey. It operates in four segments: Las Vegas Locals, Downtown Las Vegas, Midwest and South, and Atlantic City. BYD closed at $7.77 with 9.44% gain on February 7, 2013 and had a daily call volume ratio of 10.81. BYD had been trading in the range of $4.75-$9.61 in the past 52 weeks. BYD has a high beta of 2.47.

Fundamentally, BYD has an enterprise value of $4.36B with a market cap of $672.79M. BYD has a total cash of $343.77M with a total debt of $4.09B. BYD generates an operating cash flow of $216.4M with a levered free cash flow of $-244.90M. BYD has an operating margin of 9.73% and a negative profit margin of -0.38%. BYD's ROE is -1.03%.

Technically, the MACD (12, 26, 9) indicator is showing a bullish trend with diverging MACD difference. RSI (14) is showing a strong buying momentum at 73.75, where above 70 is considered as over-bought. BYD is currently trading above its 50-day MA of $6.50 and 200-day MA of $6.55, as seen from the chart below.

(click to enlarge)

Source: StockCharts.com

In short, these 4 stocks had been on a bullish run with positive momentum. However, these are high beta stocks and may not be suitable for investors with low risk appetite. Conservative investors may want to wait for a safer, lower entry point to establish the long-term position. Credit put spread options can be considered to gain premium profit while allowing investors to acquire stocks at a lower price.

Note: All prices are quoted from the closing of February 8, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Source: 4 Gaming Stocks Gaining Strong Upside Momentum