Russell 2000 component and up-and-comer concert promoter Live Nation (LYV) drew an intimate gathering of receptive bulls on Thursday. Optimistic call buyers were spied paying up for the possibility of a rousingly festive show in its shares, not too far down the road. 

Looking at an unusual volume scan for the fore-mentioned small cap index, Live Nation came in at the number two spot of our countdown with a tally of more than 15,000 contracts compared to its daily attendance of 1,100 customers or tickets sold.

The crowd pandemonium, it turns out, was concentrated activity of more than 13,200 out-of-the-money August 12.50 calls. The contract closed with a mid market price of $0.35 on implieds of about 56%. If the likes of the crowd pleasing act called “A Double” is to make an appearance, shares of LYV would need to rally 20% by expiration.

A more explosive move with time of the calendar would, of course, potentially assist bulls with realizing gains of 100%, barring a collapse in volatility. As implieds over the past month have traded into the low 40s, there is some risk of gains being harder to realize, but not terribly so, given the dollar pricing.


Figure 1: Live Nation (LYV) August 12.50 Call

Shown above is an illustrated long call position using 10 contracts. Given or appreciating prior lows in implied volatility, I’ve also reduced current prices by 20% and into the low 40s. At current stock levels, the drop translates into a loss of about 40% or -$145 in total for the 10 lot.

Somewhat assisting the cause for roughly 90% of the bulls spied opening with the contract, negotiated block sales of $0.27 and $0.30, help reduce some of the negative impact, were implieds to come under pressure as depicted.

Aiding and abetting those bulls as well, Elliott Wave appears to be a fan of LYV. Below, we’re looking at a daily W4 setting up but yet triggered as determined by the EBOT signal line. One favorable factor with regards to the bulls targeted call position is the discussed double could be realized at a much more conservative slope in stock price than what EW is calling for with its TAPP.


Figure 2: Live Nation (LYV) Daily W4

Finally, the weekly view shows a similar wave and signal situation and could act as some bigger picture confirmation for bulls. However, as that show relates to our August ticket holders, with a mid TAPP of about $21 but a tour date scheduled for late January 2011—those bulls could be in need of a scalp or two before enjoying the show to its fullest.  


Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.