WYNN ($119) reports their Q4 tonight after the bell.
-options market is implying about a 5.25% move which is basically the 4 qtr average for the stock.
-WYNN is up about 7.5% ytd, under-performing, LVS which is up almost 20% ytd (chart below).
-WYNN’s under-performance of late could have something to do with i’s slightly rich valuation at about 21x next years earnings on 8% expected growth (only 6% sales growth), vs LVS that trades at about at 19.5x next years earnings that the street expects to grow at about 29% (22% expected sales growth). Additionally, WYNN’s largest shareholder, Universal Entertainment (~20% holder), filed a lawsuit last month basically accusing the casino operator of misusing funds and asking for transparency of the company’s finances.
-Sentiment is a bit mixed on the name with 14 Buys, 10 Holds and 2 Sells, while short interest sits at a relatively high 6.25%.
The stock is about 30% off of the all time highs made last July and about 16% of of the 52 week lows made in December. Since topping out in July after reporting their Q2 earnings, the chart has been in a massive downtrend, and just now appearing to peek it’s head above a key support /resistance level that is intact since early last year.
MY VIEW: this is not a company who’s fundamentals that I can speak to in any sort of informed fashion, but given LVS’s results last night, and the negative sentiment surrounding the Okada suit (which will not likely get resolved soon and more than likely the company on the call tomorrow will adamantly refute), I could see the stock pop back towards its 200 day moving average over the next week or so on the least bit of good news.
After taking a very quick look at the name I think it makes a little sense, especially in this giddy market to make a low premium defined risk play that the stock tests it’s 200 day moving average of about $134, IF AND IT IS A BIG IF, THE COMPANY IS ABLE TO BEAT AND RAISE WHEN THEY REPORT TONIGHT.
MY TRADE: WYNN $118.70 Bought Feb18th Regular 125/135/145 Call Fly for 1.30
Bought 1 Feb18th 125 call for 1.90
Sold 2 Feb18th 135 calls for a total of .70 (.35 each)
Bought 1 Feb18th 145 Call for .10
Break-Even on Feb18th Expiration:
Profits btwn 126.30 and 135 make up to 8.70, with max gain of 8.70 at 135, profits trail off btwn 135 and 143.70
Losses of up to 1.30 btwn 125 and 126.30 and btwn 143.70 and 145, with max loss of 1.30 below 125 or above 145.
YOU WOULD ONLY DO THIS TRADE IF YOU THOUGHT THERE WAS A HIGH PROBABILITY OVER THE NEXT 2 WEEKS, WITH THE HELP OF TONIGHT’S EARNINGS EVENT, THAT THE STOCK COULD BREAK THROUGH RESISTANCE AND TEST THE 200 DAY MOVING AVERAGE.