Calm Returns to WYNN Shares

It appears that this month’s WYNN strangle options play will fail. Relative calm has returned to WYNN (Wynn Resorts Ltd.) shares as the stock has remained flat since I launch the trade. There have been moments of action. WYNN dropped over 10% from recent highs to begin the month, but I chose not to close out the put side of the strangle. The selling stopped on a dime until yesterday’s news that Macau is considering new gambling restrictions. Once again, options action picked up on WYNN, including a swell of buying of the October 60 puts which expire this Friday. Nothing exposes fear better than quick-trigger, out-of-the-money put buying, especially when those options expire in a few days.

However, calm has returned to the trading in WYNN today as Bloomberg reports that WYNN Macau has vocalized its support for new gambling restrictions: “The idea of limiting somehow the number of gaming tables in the Macau gaming area, that’s a very good idea…It makes the industry safer. The primary objective of the government is of course to raise money, but on the other hand they have a very strong interest in how it affects the community.”

The overall reception for the Wynn Macau IPO has been lukewarm as shares trading in Hong Kong have gone nowhere since the dazzling debut. I may not initiate another WYNN options strangle play until some kind of fresh catalyst emerges over the horizon.

Be careful out there!

Full disclosure: long WYNN calls and puts

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