Option Investor
New Plays

New Option Plays

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WYNN None None

Play Editor's Note: My market bias remains bearish but today's afternoon rebound really throws a wrench in our short-term trading strategies. Plus, a real bailout plan for ABK could spark some serious short covering and a real rally for equities. The next couple of days could be pivotal for the market. FYI: Keep an eye on the FXY, which is a way to play the Japanese Yen against the U.S. dollar. A pull back near $95 might be a short-term bullish entry point to buy calls.

New Calls

Wynn Resorts - WYNN - close: 97.28 change: -1.69 stop: 94.75

Company Description:
Wynn Resorts, Limited is traded on the Nasdaq Global Select Market under the ticker symbol WYNN and is part of the NASDAQ-100 Index. Wynn Resorts owns and operates Wynn Las Vegas and Wynn Macau. Wynn Las Vegas, a luxury hotel and destination casino resort located on the Las Vegas Strip. (source: company press release or website)

Why We Like It:
Why would we add a new long call play on WYNN if we're bearish on stocks? Good question. Another one would be why are we adding a new long call play on WYNN, a casino play, if the U.S. economy is effectively in a recession? The answer is this is purely a technical play - nothing more. The recession is likely going to weigh on shares of WYNN for a good while and the stock has already broken its long-term up trend. Meanwhile WYNN is down four weeks in a row and is bouncing from significant support near $95.00. If the U.S. markets bounce at all then WYNN could see some short covering. The most recent data puts short interest at more than 6% of the 62.3 million share float. All we're looking for is a quick $5.00 move. More aggressive traders could aim for $105. We are aiming for $102.00-102.50. The 10-dma near $103 is likely to be overhead resistance. If given the opportunity we will consider switching to puts on a failed rally under $105.00 or a breakdown under $95.00. This call play should be very short-term. If it doesn't happen in the next day or two we'll probably abandon ship.

Suggested Options:
We are suggesting the March or April calls. March calls have less than three weeks left.

BUY CALL MAR 95.00 UWY-CS open interest= 999 current ask $5.90
BUY CALL MAR 100.0 UWY-CT open interest= 888 current ask $3.30

BUY CALL APR 95.00 UWY-DS open interest= 16 current ask $8.90
BUY CALL APR 100.0 UWY-DT open interest= 128 current ask $6.40

Picked on March 04 at $ 97.28
Change since picked: + 0.00
Earnings Date 02/26/08 (unconfirmed)
Average Daily Volume = 2.2 million

New Puts

None today.

New Strangles

None today.

New Play Archives