Option Bulls, Steve Wynn Bet On More Upside for Wynn Resorts, Limited (WYNN)

Wynn Resorts, Limited (NASDAQ:WYNN) call options remain popular as the casino stock's rally continues

by Josh Selway

Published on Apr 14, 2016 at 12:08 PM

Casino stock Wynn Resorts, Limited (NASDAQ:WYNN) has been one of the top performers on Wall Street this year. The shares have outpaced the broader S&P 500 Index (SPX) by a remarkable 49 percentage points over the past three months, and have surged more than 41% in 2016 atop support from their 10- and 20-day moving averages. During the stock's rapid ascent, options bulls have continued to pour their money into WYNN -- and CEO Steve Wynn even upped the ante with a recent purchase of 72,000 shares. 

During the past 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), more than 107,000 WYNN calls have been bought to open, compared to fewer than 60,000 puts. The resulting call/put volume ratio of 1.79 lands in the 93rd percentile of its annual range, indicating a greater-than-usual interest in WYNN calls during recent months, 

Narrowing the time frame, one of the most popular options during the past two weeks, going by open interest, has been the May 110 call. Data confirms significant buy-to-open activity here, meaning traders expect WYNN to trade above $110 before the contracts expire at the close on Friday, May 20. 

In today's trading, WYNN calls are crossing at twice the average intraday rate. The May 110 call is again popular, but it appears one trader sold to close a 2,000-contract block at this strike, and simultaneously opened a 1,200-contract block of the May 105 calls, as he slightly lowers his expectations for the shares. 

Elsewhere, short sellers have been on the run amid WYNN's 2016 rally. Short interest dropped 16.3% during the past two reporting periods, though over 16% -- or 3.7 times WYNN's average daily trading volume -- of the stock's float is still controlled by shorts. In other words, the shares may continue to benefit as these bears cover their positions. 

Wynn Resorts, Limited's (NASDAQ:WYNN) upside momentum is continuing today -- on track for another solid April -- with the stock 0.7% higher at $98.34. Earlier, the equity peaked at $101.16, amid the Steve Wynn news and ahead of today's annual shareholder meeting. 

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