Market Insights

Wynn Resorts rallied two months ago, and one big investor may expect further upside.

This large transaction was detected yesterday in the company, which is building a major casino in the United Arab Emirates:

• 36,000 September 80 calls were sold for $28.25.
• 47,000 December 95 calls were purchased for $18.50.

Calls fix the price where investors can buy a security. They can gain value quickly when shares appreciate, but also expire worthless if a stock doesn’t move enough.

Volume was below open interest in the September 80s but not the December 95s. That may suggest an existing position was closed in the contracts expiring next month and some of the capital was rolled to December. The transaction was potentially bullish with some interesting subtleties.

First, adjusting the position let the trader collect a credit of $14.75 million.

Second, he or she exited calls with 100 delta and rolled into calls with 79 delta. However, given the greater number of contracts, their net delta increased from 3.6 million to 3.7 million. That means the new position will provide greater leverage if the shares keep climbing.

Third, by owning more contracts, they ultimately stand to track 4.7 million shares. (That would result from delta increasing in the December 95 calls if WYNN keeps rising.)

Wynn Resorts (WYNN), daily chart, with select patterns and indicators.

Understanding Options

In other words, the investor accomplished at least three things:

1. They gained three addition months to ride a potential rally
2. They got back some of their money at risk
3. They increased their leverage to future gains

WYNN rose 2.1 percent to $108.63 and is back near a peak from mid-2023. The company mostly operates in Las Vegas and Macau. However, attention is now focusing on its Wynn Al Marjan Island project in the Persian Gulf. The property, expected to open in early 2027, would be UAE’s first casino.

Some Wall Street analysts think Al Marjan will boost WYNN by enjoying a dominant market position in the Middle East. They see it generating additional revenue of $5-8 billion.

The stock’s 50-day moving average had a “golden cross” above its 200-day MA last month. That could make some chart watchers think a bullish uptrend has begun.

Overall option volume in WYNN was about 6 times greater than average yesterday, according to TradeStation data. Calls accounted for a bullish 93 percent of the total.

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