What a profitable difference a week has made in the portfolios of investors who found value in the low share prices of some of Las Vegas’ larger gaming companies.
Particularly impressive has been the action in Wynn Resorts Inc. (WYNN). On Monday, March 30, after a day of lackadaisical trading, WYNN shares closed at $19.19 each.
Just a week later, WYNN shares mushroomed to $31.20 per share.
And many investors are betting the share price will go even higher, at least that’s the interpretation being given to the popularity of call options. These call options trade on the basis that the share price will go higher by a certain date while put options look for a decline in price.
|Las Vegas billionaires: riches to rags?|
|Wynn Resorts Reports 4Q Loss of $159.6 Million|
|Casino revenues still in freefall|
|Also Check out our Race & Sports Section|
On Friday, April call options with strike prices of both $30 and $35 were traded heavily, according to traders who monitor the options market.
Also noted, said Jon Najarian, co-founder of OptionMonster, was heavy options activity on International Game Technology (IGT). Option traders, he said, were focused on the May 10 strike in which 14,200 calls changed hands in blocks of institutional-sized volume in rapid succession.
Where the average number of calls fall in the 800 category, Friday’s action raised call options to 19,200 trades against 163 puts in just the first two and one-half hours of trading.
Also on Monday, there was good news for Wynn Resorts. Robin Farley, chief gaming analyst at UBS Securities, raised her rating on WYNN shares to "buy" from "neutral." She cited a solid balance sheet and improved Macau prospects as reasons for the upgrade.
Farley also noted that Wynn Resorts has no debt payments due this year and holds about $1.6 billion in cash.