The Long & Short of Melco Crown Entertainment (MPEL)

Shares of Melco Crown Entertainment MPEL are trading higher on the session by 6.08%, at $8.73. With shares sitting at the recent highs, you have to wonder where they are heading next… Bulls: Bulls seem more than willing to push shares higher right now and see it only as a matter of time before a breakout occurs. Bulls will note the upward-trending 20-day, 50-day, and 200-day moving averages as proof that bulls are in control of the name. Bulls will also note that the fundamentals of Macau are still positive and that recent metrics show gaming in the area gaining steam. A bullish trader could buy the May $9/10 call stupid for a net debit of $0.65. This is a highly leveraged bet that shares break higher in a big way. Bears: Bears will note that Melco Crown Entertainment is overbought and trading too far above the 50-day and 200-day moving averages. This means that some mean-reversion could be in the cards. Bears will also note that the majority of the bullish Macau metrics are built into the stock price already and that buyer fatigue will be stepping in at any moment. A bearish trader could buy the May $9/8 put spread for a net debit of $0.50. Melco Crown Entertainment Limited is a developer, owner and, through its subsidiary Melco Crown Gaming, operator of casino gaming and entertainment resort facilities focused on the Macau market. Melco Crown Gaming is one of the six companies licensed, through concessions or sub-concessions, to operate casinos in Macau. The company owns and operates City of Dreams, Altira Macau, Mocha Clubs and Taipa Square Casino. Its other projects include City of Dreams Phase II, Macau Studio City Project and Macau Peninsula Site.