$WYNN calls pay off on bounce

Option traders doubled their money on Wynn Resorts today.

On Jan. 12, Investitute’s market scanners found that 4,000 Weekly $170 calls expiring on Feb. 23 were purchased for $3.70 to $4.75 with shares at $165.50. These were clearly new positions, as open interest in the strike was only 41 contracts before the activity appeared.

Those calls traded for $8.30 just before the closing bell today, more than double their original purchase price. The stock rose 3.9% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

WYNN was up 4.84% today to close at $171.39. The casino operator rebounded after falling sharply with allegations of sexual harassment against its namesake founder.