Wynn Resorts (WYNN) 11/2/09 PriceWatch Alert Up To 50.24% Return

Posted: Monday, November 02, 2009 8:04 AM EDT
By: Market Intelligence Center Staff

Wynn Resorts (NasdaqNM: WYNN) ended the last trading session at $54.22. So far the stock has hit a 52-week low of $14.50 and 52-week high of $74.90. Wynn Resorts stock has been showing support around 49.52 and resistance in the 60.10 range. Technical indicators for the stock are Bearish and S&P gives WYNN a neutral 3 STAR (out of 5) hold rating. WYNN appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Mar '10 55 covered call (UWY CK) for a net debit in the $46.22 area. That is also the break even stock price for this trade. This covered call has a 138 day duration, provides 14.75% downside protection and a 19.00% assigned return rate for a 50.24% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the WYNN Jan '11 17.50 Call (VEG AW) and selling the Mar '10 55 call (UWY CK) for a $29.90 debit. The trade has a 138 day life and would provide 12.58% downside protection and a 25.42% assigned return rate for a 67.00% annualized return rate (for comparison purposes only). Wynn Resorts does not pay dividends at this time. [ABR-Seven Summits Research]