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Hawk’s Nest

Recent Spin-Off Draws Bullish Options into Venue Opening

by | May 22, 2023

Sphere Entertainment (SPHR) is a recent spin-off from Madison Square Garden that is drawing elevated bullish activity in the options market. SPHR on 5/22 with 3000 August $30 calls sold to buy 3000 November $30/$40 call spreads, 1500 November $40/$45 call spreads bought on 5/10 which have seen more accumulation daily while 2000 November $30 calls bought $1.20 on 5/15 and 3500 June $22.50 calls bought on 5/16. SPHR recently touched the $21 level which retested a longer-term trend inflection and the $31.70 to $33.25 zone contains three major VWAPs and VPOCs. Options positioning suggests a return to the $40-$45 zone later this year. SPHR produces, presents, or hosts various live entertainment events, including concerts, family shows, and special events, as well as sporting events, such as professional boxing, college basketball and hockey, professional bull riding, mixed martial arts, and esports and wrestling in its venues, including The Garden, Hulu Theater, Radio City Music Hall, and the Beacon Theatre in New York City; and The Chicago Theatre. The company also operates 70 entertainment dining and nightlife venues spanning 20 markets across five continents under the Tao, Marquee, Lavo, Beauty & Essex, Cathedrale, Hakkasan, and Omnia brand names; and creates and operates New England’s premier music festival. SPHR has a market cap of $900M and trades 8.2X Earnings and 11.3X EBITDA. SPHR has a catalyst nearing with MSG Sphere in Las Vegas seen opening in September and expected to generate significant income and revenues.