2 Casino Stocks Seeing Heavy Options Trading

One MGM trader may be initiating a long call spread

Oct 7, 2019 at 3:08 PM
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Options traders are blasting Wynn Resorts, Limited (NASDAQ:WYNN) today, as the stock tests a key level of support. With about an hour left in the session, around 44,000 calls have changed hands -- four times what's typically seen, and volume pacing in the 100th annual percentile -- compared to roughly 8,100 puts.

Drilling down, the March 105 call is most active, with almost 15,000 contracts on the tape. It looks like some of the activity here may be due to one trader rolling down their March 115 calls to the 105 strike, lowering the bar on their bullish bet. The $105 level has served as staunch support for the casino stock for most of 2019, with WYNN finding a floor here earlier today, last seen down 1.6% at $107.17.

More broadly speaking, the December 125 call is home to peak open interest of 16,221 contracts. Data from the major options exchange confirms mostly buy-to-open activity here, as speculators bet on a big rally for Wynn Resorts shares into year's end.

wynn stock daily price chart on oct 7

MGM Resorts International (NYSE:MGM) stock is also seeing accelerated options trading today. At last check, around 26,000 calls exchanged so far, nearly triple the average intraday amount and 13 times the number of puts traded.

The weekly 11/1 28-strike call has seen most of the action, and it looks like one speculator may be using the out-of-the-money options to initiate a long call spread with the weekly 11/1 29-strike call. If this is the case, the goal is for MGM to rally right up to the sold 29 strike by the close on Friday, Nov. 1.

This action could also be indicative of a roll down, though, as MGM stock continues to churn below its 200-day moving average. The equity breached this formerly supportive trendline last week as it continued to retreat from its mid-September peak above $30. Today, the shares are trading fractionally lower at $27.27.

mgm stock daily price chart on oct 7


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