Call Buyers Blast Booming Wynn Resorts, Limited (WYNN)

Wynn Resorts, Limited (NASDAQ:WYNN) hit an annual high earlier

Sep 14, 2016 at 2:54 PM
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Call buying has been picking up steam on Wynn Resorts, Limited (NASDAQ:WYNN) in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, WYNN stock sports a 10-day call/put volume ratio of 2.04 across this trio of options exchanges -- in the elevated 73rd percentile of its annual range.

This call-skewed stance is echoed in the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.60. Not only does this show that calls outweigh puts among options expiring in three months or less, but it rests below 87% of all comparable readings taken in the past year. In other words, short-term speculators are more call-heavy than usual toward the casino stock.

It's more of the same in today's trading, too, with calls crossing the tape at 1.6 times the average intraday rate -- and outpacing puts by a more than 2-to-1 margin. Most active is WYNN's September 106 call, where data from the ISE suggests new positions are being purchased. In other words, call buyers expect WYNN stock to settle north of $106 at this Friday's close when front-month options expire.

Elsewhere, more optimistic call buyers appear to be initiating fresh positions at WYNN's September and October 110 calls. If this is the case, the goal is for the security to break out to levels not seen since July 2015 over the next five weeks.

With nearly 14% of the stock's float sold short, though, there could be an ulterior motive to some of the recent call buying. Specifically, short sellers could be initiating protective calls to hedge their bearish bets against any additional upside risk.

This wouldn't be too surprising, considering the stock has been a standout on the charts, rallying 54% year-to-date. In fact, the security has surged 2.8% today to trade at $106.68 -- breaking out above previous resistance in the $104 region, and notching a new 52-week peak of $107.68 along the way. This move higher comes after Sheldon Adelson opened a new resort in Macau Tuesday, with some suggesting this could be another sign of a turnaround in China's struggling gambling region.

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