Wynn Resorts (WYNN) 11/12/09 PriceWatch Alert Targets 11.05% Downside Protection

Posted: Thursday, November 12, 2009 8:41 AM EDT
By: Market Intelligence Center Staff

Wynn Resorts (NasdaqNM: WYNN) closed yesterday at $66.54. 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 64.31 and resistance in the 68.09 range. Technical indicators for the stock are Bullish 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 70 covered call (UWY CN) for a net debit in the $59.19 area. That is also the break even stock price for this trade. This covered call has a 128 day duration, provides 11.05% downside protection and an 18.26% assigned return rate for a 52.08% 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 40 Call (VEG AH) and selling the Mar '10 70 call (UWY CN) for a $23.20 debit. The trade has a 128 day life and would provide 5.02% downside protection and a 29.31% assigned return rate for an 84.00% annualized return rate (for comparison purposes only). Wynn Resorts does not pay dividends at this time. [THA-Seven Summits Research]