Icahn Rumors Have Wynn Resorts, Limited (WYNN) Stock, Options Demand Spiking

It appears Carl Icahn has not taken a position in Wynn Resorts, Limited (WYNN), despite earlier rumors

by Alex Eppstein

Published on Aug 11, 2016 at 1:57 PM
Updated on Jun 24, 2020 at 10:16 AM

Wynn Resorts, Limited (NASDAQ:WYNN) shot higher this morning on rumors Carl Icahn has taken a position in the casino operator. While those rumors have since been debunked, the stock remains 3.3% higher at $102.83. Plus, call options remain in heavy demand.

Diving right in, WYNN calls are changing hands at double the expected intraday rate, and more than triple the pace of puts. Buy-to-open activity is detected at several calls in the weekly 8/12 series, with the in-the-money 102 strike occupying the top spot. By purchasing these contracts for a volume-weighted average price (VWAP) of $0.84, speculators are banking on the stock to topple breakeven at $102.84 (strike plus VWAP) by Friday's close, when the weekly series expires. However, even if the call expires out of the money, the most the traders risk losing is the initial premium paid.

Today's trend toward call buying is par for the course, based on data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, during the last 10 weeks, speculators have bought to open 1.70 WYNN calls for every put -- a ratio that outstrips 78% of all others taken in the prior year.

That's not to say everyone's a fan of the stock. In fact, 80% of analysts tracking the shares consider them a "hold" or worse, while the consensus 12-month price target of $102.50 is flush with current trading levels (no pun intended). Having said that, a continuation of WYNN's upward run could force analysts to positively revise their opinions.

Speaking of upward runs, today's gains are less the exception than the rule. Wynn Resorts, Limited (NASDAQ:WYNN) has rallied hard off its January lows, just south of $50. In other words, in less than eight months, the shares have more than doubled in value, and are approaching annual-high levels registered in late June.

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