Savings Experiment: Snow Removal
Why Your 2012 Tax Bill May Jump By $8,000
Wynn Resorts (WYNN - option chain) stock is trading slightly lower today after the company reported a fourth-quarter loss of $5.2 million, or 4 cents per share. Excluding one-time items, WYNN earned 8 cents per share on revenue of $809 million. Analysts had forecast a profit of 13 cents per share on revenue of $784 million. Though the company was pleased with results from its Macau properties, company CEO Steve Wynn told a conference call that the company has a bearish outlook for its Las Vegas properties. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on WYNN.This morning, WYNN opened at $62.49. So far today the stock has hit a high of $63.11 and a low of $61.18. As of 11:55, WYNN is trading at $62.39, down 41 cents (-0.6%). The chart for WYNN looks neutral and S&P gives WYNN a neutral 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $75 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in seven weeks as long as WYNN is below $75 at April expiration. Wynn would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.
WYNN hasn't been above $75 at all since 2008 and has shown resistance around $65 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in WYNN.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
