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.]
