Unusual Options Activity: Wynn Resorts (WYNN)

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  • Casino operator picks up a bull.

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  • The March 2020 $110 call options on Wynn Resorts (WYNN) saw over 2,050 contracts trade against a prior open interest of 231, about a 10-fold surge in volume.

    The bet, which expires in 158 days, is about $1.30 in the money, given the recent share price of $111.30. It should therefore move dollar-for-dollar with shares higher, and could double if shares get to $125.00.

    If shares get back to their old high of $150, the option would be worth $40, a 220 percent return from the $12.50 option price.

    Casino operators have been a popular place to trade this year for both investors and insiders, as gambling trends tend to reflect the overall economy. Shares of Wynn have traded under $100 in the past year, but still have room to run simply to get back to old highs.

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  • Action to take: Shares still look attractive here up to $115, where investors can lock in a solid 3.8 percent dividend yield and take advantage of the fact that the house always wins for slow and steady profits.

    For a faster play that isn’t a gamble, options traders should consider joining in on the March 2020 $110 call, given that it’s slightly in-the-money and a rally in shares will allow traders to profit with less capital at stake than buying 100 shares outright.