A Worthy Speculation
Add WYNN Puts
SPECULATIVE PLAY: Buy the WYNN March 60 Puts (O:WYNN 10O60.00) at market, good for the day. At this time, do not place a protective stop limit or pre-determined sniper sell. Earnings after today’s close will dictate our trading.
Dear Bottarelli Research Member,
Back on February 22nd, we entered the WYNN March 65 Calls (O:WYNN 10C65.00) for $2.34 in anticipation of their upcoming earnings report. But as the stock rallied leading up to their earnings, we sold these calls on February 24th for $2.80, good for a quick and easy 19.66%. Jump back to today, and it looks like we’re primed and ready to switch gears and play WYNN down.
You see, my research staff tells me that the last four earnings reports for WYNN have all resulted in down-moves. Supporting this reaction was recent news from Las Vegas Sands (LVS – NYSE), which dropped on earnings day due to a weak forecast.
Analysts polled by Thomson Reuters expect Wynn to earn $0.13 per share on revenue of $785 million, which is way above last year’s earnings of $0.07 per share on revenue of $614 million. But if the forward guidance comes in weaker than expected, then WYNN can suffer the same fate as LVS.
Given this situation, I think the potential of a downside move warrants a cheap, speculative position. Specifically, the WYNN March 60 Puts (O:WYNN 10O60.00) are currently trading between $2.13 and $2.20 per contract. If WYNN falls after the close today, this position can jump quickly.
Since this play is not protected, I consider it a true speculative position. But with added risk comes additional reward. For $2.00 per contract, it’s worth rolling the dice (note clever casino reference) and getting positioned for a down-move. Here’s the play…
SPECULATIVE PLAY: Buy the WYNN March 60 Puts (O:WYNN 10O60.00) at market, good for the day. At this time, do not place a protective stop limit or pre-determined sniper sell. Earnings after today’s close will dictate our trading.
NOTE: Additional chatter on WYNN today has surfaced on Melco Crown Entertainment (MPEL – NASDAQ). Active call buying has lead to possible takeover rumors, and WYNN is seen as a possible bidder. With takeover plays, you typically see the company doing the buying (in this case, WYNN) fall in reaction to the news, while the company being taken over (in these case, MPEL) rise in reaction to the news. This further supports our speculative WYNN puts.
And as always…
Lock and load!
Sincerely,
© 2012 CSR Group, LLC. All rights reserved. Published in USA.
Information, opinion, research, and commentary contained herein is obtained from sources believed to be reliable; their reliability, however, cannot be guaranteed. The maxim of Caveat Emptor applies — let the buyer beware. Bottarelli Research does not provide individual investment advice, act as an investment advisor, or individually advocate the purchase or sale of any security or investment.
Investments recommended in this service should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Bottarelli Research reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscriber’s initials will be used unless express written permission has been granted to the contrary.
CSR Group, LLC expressly forbids its writers from having a financial interest in any security recommended to readers. Furthermore, all employees and agents of CSR Group, LLC and its affiliate companies must wait 24 hours before following a published recommendation.