Wynn Weekly Calls Popular As Casino Names Take Off

Casino stocks are hot today, and Wynn Resorts, Limited (NASDAQ:WYNN) is no exception

Jun 4, 2015 at 11:17 AM
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Casino firm Wynn Resorts, Limited (NASDAQ:WYNN) is powering higher -- thanks to a sector-wide rally -- as investors continue analyzing gaming conditions in Macau. The shares were last seen 6.3% higher at $108.43, and option traders are betting on even more short-term upside.

Overall call volume is running at five times the expected intraday pace, with apparent buy-to-open action at WYNN's weekly 6/5 110-strike call -- its most popular option. By purchasing these weekly calls, traders expect the shares to topple $110 by the close on Friday, when the contracts expire.

Technically speaking, the stock has struggled since its post-earnings bear gap on April 29, down about 17%. Moreover, the shares have trailed the broader S&P 500 Index (SPX) by 23.8 percentage points during the past three months.

Despite the stock's lackluster technical performance, option traders have continued to gravitate toward calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WYNN has a 10-day call/put volume ratio of 1.87, which is higher than 89% of similar readings from the past year. Said differently, calls have been bought to open over puts at a faster-than-usual rate. 

Most covering analysts maintain a skeptical outlook on the security, though. Eleven brokerage firms call Wynn Resorts, Limited (NASDAQ:WYNN) a "hold," with five others saying it's a "buy" or better." Elsewhere, WYNN's consensus 12-month price target of $129 represents a 19% premium to current levels. 

 

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