Wynn Stock Pulls Back More on Bearish Analyst Notes

However, call buying has been hot among options traders

Managing Editor
Aug 14, 2018 at 9:32 AM
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Shares of casino name Wynn Resorts Ltd. (NASDAQ:WYNN) are lower in early trading after the stock received a pair of analyst notes before the bell. Jefferies downgraded WYNN to "hold" from "buy," and slashed its price target to $170 from $229 -- a nearly 26% cut. Meanwhile, Credit Suisse initiated coverage on the stock with a "neutral" rating and $155 price target. Looking broader, of the 13 brokerage firms currently in coverage, nine sport "strong buy" recommendations.

WYNN is down 1.6% at $145.65, at last check. Longer term, the stock has been on a downtrend since its mid-May peak of $202.48, which came within a stone's throw of the stock's late-January three-year high. The 40-day moving average has been acting as a ceiling of resistance for the shares, switching from its role as a line of support in early June.

Looking toward options data, Wynn Resorts stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 2.43, ranking in the 94th percentile of its annual range. This high ratio indicates that call buying has more than doubled put buying during the past two weeks of trading.

Echoing this, WYNN's Schaeffer's put/call open interest ratio (SOIR) of 0.47 indicates that calls outweigh puts among options expiring in the next three months. Further, this SOIR ranks in the 18th percentile of its annual range, meaning short-term speculators have rarely been more call-heavy in the past year.

Lastly, now may be an attractive time for traders to jump on WYNN with near-term options. This is per the stock's Schaeffer's Volatility Index (SVI) of 29%, which ranks in the 23rd percentile of its annual range. This suggests that near-term options are pricing in relatively low volatility expectations at the moment, which could help maximize the benefit of leverage for premium buyers.
 

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