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Friday, April 12, 2024

Bullish Bets Build In Wynn Resorts Weekly Options


Today’s tickers: WYNN, CTRP, DTV & WMT

WYNN – Wynn Resorts, Ltd. – Weekly options on Wynn Resorts are humming with activity today on news the casino operator is cutting ties with principal shareholder and director, Kazuo Okada. Wynn is the biggest gainer in the S&P 500 Index this afternoon, with the stock trading 6.7% higher on the day at $120.24. Options activity suggests some traders expect the stock to extend gains on the news, at least through the end of this week. Feb. ’24 $120 strike calls printed the most volume of the weekly contracts, with some 2,660 lots changing hands against open interest of 204 positions. It looks like most of the $120 strike calls were purchased for an average premium of $2.04 apiece. Traders long the contracts stand ready to profit at expiration in the event that Wynn’s shares rally another 1.5% to surpass the average breakeven price of $122.04. Bullish activity spread to the higher Feb. ’24 $125 strike where around 1,100 call options were snapped up at an average premium of $0.50 each. Finally, fresh interest is building in far out-of-the-money contracts at the Feb. ’24 $130 strike where some 925 contracts traded against zero open positions. Most of the calls appear to have been purchased for an average premium of $0.16 each, positioning traders to profit should shares soar 8.25% to top the average breakeven price of $130.16 by expiration. Shares in WYNN last traded above $130.16 in November of last year.

CTRP – Ctrip.com International, Ltd. – Shares in China’s largest online travel site took a big hit Tuesday after the Company reported lower-than-expected fourth-quarter earnings on Monday. The earnings miss was followed by a number of analyst downgrades, helping drive Ctrip.com’s shares down as much as 10.3% to an intraday low of $22.14 this morning. Call option activity on the stock suggests some traders are positioning for shares in CTRP to recover somewhat in the near term. It looks like investors purchased around 490 Mar. $24 strike calls for average premium of $0.68 apiece and another 1,000 call options up at the Mar. $25 strike at an average premium of $0.40 each. Call buyers may profit at expiration next month in the event that CTRP’s shares rally 8.0% and 11.2% over the current share price of $22.85 to top the average breakeven points at $24.68 and $25.40, respectively.

DTV – DIRECTV, Inc. – The largest U.S. provider of satellite television is seeing heavy volume in the Jan. 2013 expiry call and put options this morning. The three-legged options combination strategy dominating overall volume of 17,680 contracts on DIRECTV suggests at least one strategist is positioning for the price of the underlying to potentially hit fresh all-time highs by expiration next year. Shares in DTV are up 0.80% today at $45.33 as of 12:15 p.m. in New York. The most active trade in DIRECTV options today appears to be the sale of Jan. 2013 $40 strike puts tied to the purchase of the Jan. 2013 $50/$57.5 bull call spread. Volume has been on the rise throughout the first half of the session, with upwards of 5,200 contracts changing hands at each strike so far today. The three-legged transaction appears to have been put on at a net credit of $0.80 per contract. The strategist walks away with the net credit as long as shares in DTV exceed $40.00 at expiration and may add to those gains if shares rally another 10.3% to exceed the effective breakeven price of $50.00. Maximum potential profits of $6.70 are available on the combo should DIRECTV’s shares surge 26.8% to exceed a record high of $57.50 by January 2013 expiration.

WMT – Wal-Mart Stores, Inc. – Weaker-than-anticipated fourth-quarter results from the world’s largest retailer has shares in Wal-Mart trading down 4.05% at $59.95 in early-afternoon trade. Investors expecting a quick rebound in the price of the underlying drove up call volume in Wal-Mart weekly options this morning. The Feb. $60 strike is the most active weekly call option, with more than 3,200 contracts in play against open interest of 54 open positions. The majority of these contracts were likely purchased for an average premium of $0.44 apiece, positioning buyers to profit should WMT’s shares settle above the average breakeven price of $60.44 by expiration.


Caitlin Duffy

Equity Options Analyst

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