Shares of Wynn Resorts, Limited (NASDAQ:WYNN) gapped 8.7% higher on Jan. 22, after the casino concern reported earnings. And while the stock has sold off since then after sexual misconduct allegations prompted Steve Wynn to step down as CEO, one options trader today appears to be betting on another positive earnings reaction.
Specifically, the May 170 call is WYNN's most active option so far today, with 8,439 contracts traded. Most of this is due to a 5,361-contract block that was bought to open for an initial net debit of $4.77 million (number of contracts * $8.90 premium paid * 100 shares per contract), according to Trade-Alert.
This is also the most the trader stands to lose, should WYNN remain below the strike through expiration at the close on Friday, May 18, a time frame that includes the company's April 23 earnings report. Profit, meanwhile, is theoretically unlimited on a move north of breakeven at $178.90 (strike plus premium paid).
This bullish positioning by WYNN options traders is nothing new. Peak open interest of 12,349 contracts is found at the March 200 call, and data from Trade-Alert points to significant buy-to-open activity here in late January.
Looking closer at the charts, Wynn Resorts stock traded in a channel of higher highs and lows from December 2016 through its post-earnings bull gap earlier this year. After notching a three-year high of $203.63 on Jan. 25, the equity pulled back sharply on the Wynn accusations, and were last seen trading at $161.31.
And while the shares spent most of February consolidating atop their 80-day moving average, they breached this level earlier this week on disappointing February Macau gaming revenue, and are now testing their rising 120-day trendline. WYNN hasn't closed below this moving average since August.
