Option traders have been consistently high on Wynn Resorts, and their instincts have proven right.
On Aug. 23, Investitute’s tracking systems showed that 2,000 Weekly $135 calls that expire this Friday were purchased for $2.89 as part of a bullish spread with shares at $134.13. This was clearly a new position, as open interest in the strike was just 111 contracts before the trade occurred.
Today those calls traded for $8.36, nearly tripling in value. The stock rose just 6.84 in the same time frame, underscoring how options can far outpace gains in their underlying shares.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
WYNN was off 0.64 percent to close at $142.50 today but rallied sharply last week on strong numbers from Macau.