Resort and casino operator Wynn Resorts (WYNN) has been trending higher in recent months, but shares are still down 6% over the past year. One trader sees shares pulling back over the next few weeks.
That’s based on the May $95 puts. With 52 days until expiration, 6,516 contracts traded compared to a prior open interest of 117, for a 56-fold rise in volume on the trade. The buyer of the puts paid $2.46 to make the bearish bet.
Wynn shares recently traded just shy of $100. So the stock would need to pull back nearly 5% for the option to move in-the-money. Shares are currently about midway between their 52-week low of $81.65 and their 52-week high of $117.86.
The casino is coming off a strong earnings rebound out of the pandemic era, with earnings surging 2,150% and revenues jumping 83%.
That strong return has shares trading for just 16 times earnings.
Action to take: Shares are a bit overbought in the short-term and look ready for a pullback. Long-term investors may like shares in the low-to-mid $90 range. At current prices, Wynn Resorts also pays a 1% yield.
For traders, the May puts are well positioned for a short-term market pullback, and given how overbought shares are in the short term right now.
Traders can likely nab a quick mid-double-digit profit in the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.