WYNN Stock's Recent Rally Could Be Short Lived

WYNN call options have been popular

Deputy Editor
Sep 13, 2019 at 12:11 PM
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We recently covered casino stock Wynn Resorts, Limited's (NASDAQ:WYNN) early September drop on disappointing Macau revenue. The security has managed quite the rebound, however, with seven of the eight days following this coverage ending in the black. This rally could be cut short though, as WYNN squares up with its 200-day moving average -- a trendline that has historically acted as resistance on the charts. 

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, WYNN has come within one standard deviation of its 200-day three times before, ending lower one month later 67% of the time, with an average one-month loss of 5.06%. At its current perch of $118.86, a similar swing would have the shares trading around $12.80, which has acted as an area of pressure for the stock's lower lows in the past few months. 

Despite its 12.1% year-over-year deficit, analysts have been quite bullish over WYNN, with eight of the 12 in coverage calling it a "strong buy." What's more, the consensus 12-month target price of $135.94 hasn't been hit since July. 

Optimism has pervaded the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) as well, with 3.24 calls bought for every put in the last two weeks. This ratio sits higher than 91% of all other readings from the past year, too, suggesting a much healthier appetite for these bullish bets of late. 

That being said, now might be the time to speculate on WYNN's next move with options. The security's Schaeffer's Volatility Index (SVI) of 36% is in the low 13th percentile of its annual range, meaning options are relatively cheap right now. 

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