Is it Time to Roll the Dice on Casinos: Wynn Resorts, Limited Stock (NASDAQ: WYNN)
The last time that Wynn Resorts, Limited (NASDAQ: WYNN) was trading near this price was on July 10 when the price was testing an established level of support near $70. It was a price level that was tested several times previous, but this time the price surged higher. The move on July 15 was part of a broader buying spree of travel-related companies that quickly fizzled. Now the price finds itself in a similar position with travel stocks rallying and option activity turning more bullish.
Wynn has its earnings report coming up on August 4. Analysts are currently projecting significant losses for 2Q of $4.98 compared to making $1.44 last year. Clearly, the company has been significantly impacted by COVID-19 closures and the recent surge cases. However, many similar companies have been weathering this turbulent time with the hope of reopening.
As you look at the technical analysis of Wynn since July 15, the price has been falling back to support on declining volume. The setup and yesterday’s move is an indication of support with the near-term potential of retesting the resistance near $87.
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Coupled with Tuesday’s bullish move, there was significant option activity. The 31 JUL 20 $75 call option had over 6,500 contracts traded with only 883 option interest. With most of the activity on the buy side, it’s a bullish indication for the price leading into the end of the week.
Option traders may want to construct a trade looking for a near-term rally leading into or through the earnings. The 21 AUG 20 75/80 long call vertical can be bought for around $1.70. The trade achieves max gain of $330 per contract or 195% ROR if the price closes above $80 by expiration. Consider closing early for $3.30 or more.