Option traders have been playing consistently in Wynn Resorts, and they came up aces again today.
On Sept. 21, Investitute’s proprietary programs showed that 2,500 Weekly $145 calls that expire on Oct. 6 were purchased for $2.52 as part of a bullish spread with shares at $143.92. This was clearly fresh buying, as open interest in the strike was a mere 51 contracts before the trades occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” and updated the trade this afternoon.
Those calls sold for $5.65 today, more than double their purchase price. The stock rose 4.1 percent in the same time frame, showing how quickly options can far outstrip gains in their underlying shares. It was the second winning call trade in the name posted on Investitute this month.
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 popped 3.14 percent to $148.92 today. The casino operator rallied after UBS raised its price target on the stock to $174 from $149.