Filed under: Major movement, Good news, Industry, China, Options, Technical Analysis, Las Vegas Sands (LVS)
Wynn Resorts Ltd. (NASDAQ: WYNN) shares are surging on news that the government of Chinese gambling mecca Macau will not issue new casino licenses for the near future. This has given casinos like WYNN and Las Vegas Sands (NYSE: LVS), who have already acquired licenses and built casinos in Macau, a big advantage in the growing Chinese casino market. If you think that the stock won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on WYNN.
After hitting a one-year low of $85.53 in June, the stock hit a one-year high of $176.14 in October. WYNN opened this morning at $95.81. So far today the stock has hit a low of $95.60 and a high of $106.96. As of 12:15, WYNN is trading at $101.55, up $6.01 (6.3%). The chart for WYNN looks neutral and deteriorating, while S&P gives the stock a bearish 2 Stars (out of 5) Sell rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $75 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just two months as long as WYNN is above $75 at June expiration. Wynn would have to fall by more than 26% before we would start to lose money. Learn more about this type of trade here.
Continue reading Wynn Resorts (WYNN) rises on news from Macau
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