July 25th Options Now Available For Wynn Resorts

The article discusses potential options strategies for Wynn Resorts (WYNN) stock, focusing on a $75 put option and an $88 call option. Selling the $75 put offers a potential 0.28% return if it expires worthless, while a covered call strategy using the $88 call could yield a 6.82% return if the stock is called away; the odds of the call expiring worthless are currently 52%, which would result in a 4.09% boost of extra return to the investor, or 29.83% annualized. The implied volatility for the put and call options are 47% and 43% respectively, while the actual trailing twelve month volatility is 40%.

Analysis

The article details two specific options strategies for Wynn Resorts (WYNN), which is currently trading at $85.66 per share. For investors considering acquiring WYNN, selling the $75.00 strike put contract with a current bid of $0.21 offers an opportunity to potentially purchase shares at an effective cost basis of $74.79, representing an approximate 12% discount to the current stock price. Analytical data suggests an 81% probability of this out-of-the-money put expiring worthless, in which case the seller would realize a 0.28% return on the cash commitment, or a 2.04% annualized YieldBoost. Alternatively, for existing WYNN shareholders, selling a covered call at the $88.00 strike price, which has a current bid of $3.50, could generate a total return of 6.82% if the stock is called away by the July 25th expiration. This strike is approximately 3% above the current trading price. There's a 52% chance, according to current data, that this call option expires worthless, allowing the investor to retain their shares and the premium, translating to a 4.09% YieldBoost, or 29.83% annualized. The implied volatility for the put example is 47% and for the call example is 43%, both of which are modestly higher than WYNN's actual trailing twelve-month volatility of 40%, indicating that option markets are pricing in slightly greater future price fluctuations than observed historically.

Key Decisions for Investors

• Investors interested in acquiring Wynn Resorts shares at a lower effective price could consider selling the $75.00 strike cash-secured puts, which offers a potential cost basis of $74.79 or a 2.04% annualized return if the option expires worthless.
• Current Wynn Resorts shareholders seeking to generate income and willing to sell their shares at $88.00 could evaluate writing covered calls at that strike, potentially achieving a 6.82% return if called or a 29.83% annualized premium yield if the option expires worthless.
• Given that implied volatilities of 43-47% are slightly above the 40% historical volatility, option sellers may find current premiums relatively attractive, though this also reflects market anticipation of potentially increased share price movement.
• Before implementing these options strategies, a thorough assessment of Wynn Resorts' business fundamentals and individual risk tolerance is crucial, particularly considering the obligation to purchase shares with the put strategy or the capped upside potential with the covered call strategy.