Unbalanced WYNN

[barn32]

WYNN is currently trading around $101, and has made a nice comeback after getting hammered post-election to below $90. I think the move might be over (for the time being), so to best capitalize off what I think will be a stalling out or a backing off, I put on a Dec. 2nd, unbalanced butterfly spread.

+1, 99
-3, 102
+2, 105

Ideally, I would like to go as wide as possible and still receive a credit (or a very small debit). Going three wide in my strikes got me a 50¢ credit.

There is no downside (the worst you can do to the downside is to make $50, which is the size of your credit), and the worst you can do to the upside is to lose $250 (the width of the strikes minus the credit.) The maximum gain on the trade is $350 at around $102, and the upside breakeven point is $103.90. Maximum loss is achieved at $105.20.

So, if my analysis is correct I'll profit anywhere from $50 to $350 and if it's incorrect and WYNN keeps shooting up past $103.90 I could easily lose the maximum of $250.

[Simply selling the stock short, or doing a covered short is an alternate play with much merit, but this trade is for an IRA account where short selling is not allowed.]


http://i65.tinypic.com/2hn04mp.jpg

http://i65.tinypic.com/xelycp.png

[barn32]

Repeating the trade for next week albeit a tad more conservative.

+1 101
-3 104
+2 107

35¢ Credit

http://i66.tinypic.com/el2kpk.png

[barn32]

http://i65.tinypic.com/xelycp.pngAll options expired for a $43 profit (including commissions.)

[barn32]

WYNN just crashed $12 right before my eyes, so instead of WYNN popping up 2 or 3 dollars tomorrow so I can make a maximum gain, it looks like I'm going to make ~$35 on my second trade.

I haven't seen any news yet, but something must have happened. (Down $9 now.)

[barn32]

"Why Casinos Stocks Plunged Suddenly Today
A Beijing-imposed limit on ATM withdrawals in Macau had investors worried about the Chinese gaming industry Thursday.

Gaming stocks plunged suddenly on Thursday after China limited the amount of money Macau visitors could take out of the ATM. At just after 2:00 EST, the news hit the market, and shares of Wynn Resorts (NASDAQ:WYNN) fell 11.1%, Las Vegas Sands (NYSE:LVS) dropped 12.4%, and Melco Crown Entertainment (NASDAQ:MPEL) dropped 13.7% at the end of trading. MGM Resorts International (NYSE:MGM) was spared some of the pain because it is still Las Vegas-focused, but its shares were down 5.3% nonetheless."

An obvious overreaction, and I'll probably be buying WYNN in the morning.