Option Bulls Gamble on Extended Wynn Resorts, Limited (WYNN) Rally

Shares of Wynn Resorts, Limited (NASDAQ:WYNN) have been moving higher in recent months, and options traders are betting on more gains

Apr 7, 2016 at 10:50 AM
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Stock and option volume are soaring today on Wynn Resorts, Limited (NASDAQ:WYNN), both arriving in the 100th percentile of their annual ranges. More specifically, call options are trading at five times the average intraday pace. While many traders are targeting the weekly 4/8 series, other speculators may be initiating long positions at the April 104 call. If so, they're betting on WYNN to topple $104 for the first time since mid-August, before the contracts expire at the close on Friday, April 15. 

This is just more of the same from WYNN option traders. During the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has accumulated a call/put volume ratio of 2.64 -- just 4 percentage points from an annual high. 

Elsewhere, short sellers account of 17.8% of WYNN's float, with the stock's short-interest ratio standing at a healthy 3.30. However, during the two most recent reporting periods, short interest dropped on WYNN by 18.4%. Still, it's not out of the question to assume some of these recent call buyers are short sellers hedging their positions, especially in light of the stock's recent gains.

On the charts, WYNN has been strong during the past two months -- and could be destined for more gains this month. The stock's gap higher in mid-March helped it close above its 60-week moving average for the first time since August 2014. Now, the shares are on pace to close above this trendline for the fourth consecutive week. 

In fact, Wynn Resorts, Limited (NASDAQ:WYNN) is up 10.4% today at $98.86, after Telsey Advisory lifted its opinion to "outperform" from "market perform," and boosted its price target to $112 from $67. On a related note, founder and CEO Steve Wynn just announced plans for a $1.6 billion resort in Las Vegas -- which Telsey described as a "shrewd move."

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