Option Activity Alert: Wynn Resorts, Supervalu

WYNN – Wynn Resorts, Ltd. – Shares of the casino operator rallied as much as 9.5% this afternoon to reach a two-year high of $102.75 on strong market expectations for October sales at Macau-based casinos during China’s Golden Week holiday. Wynn Macau is Hong Kong’s second-largest listed casino firm by market value and earlier rallied to its highest level since listing in October 2009 in Hong Kong trading on bullish speculation. In U.S. trading, bullish options traders are picking up near-term calls in order to position for continued upward momentum in the price of WYNN’s shares through expiration on Friday. Traders purchased some 5,200 now in-the-money calls at the October $100 strike for an average premium of $1.56 each. In-the-money call buyers are poised to profit should Wynn Resorts’ shares trade above the average breakeven price of $101.56 through expiration day. Bullish sentiment spread to the higher October $105 strike where 2,700 calls were scooped up at an average premium of $0.55 apiece. Investors holding these contracts profit if the casino operator’s shares rise 2.725% over today’s high of $102.75 to exceed the average breakeven price of $105.55. Finally, uber-bulls bought 2,400 calls at the October $110 strike at an average premium of $0.24 a-pop and face an average breakeven price of $110.24. The overall reading of options implied volatility on Wynn Resorts, Ltd. is up 9.3% to arrive at 46.77% ahead of the final bell.

SVU – Supervalu, Inc. – The operator of U.S. grocery retailers attracted bullish investors during the first half of the trading session with shares rising as much as 3.8% to an intraday high of $11.92. Investors expecting shares in Supervalu to continue higher ahead of expiration next month purchased approximately 1,700 calls at the November $12 strike for an average premium of $0.50 apiece. Call buyers stand ready to make money if SVU’s shares rally another 4.9% over today’s high of $11.92 to surpass the average breakeven point at $12.50 by November expiration. Supervalu’s overall reading of options implied volatility is up 22.8% at 47.98% just before 12:25 pm ET. Investors buying up calls on SVU appear bullish on the stock ahead of the firm’s second-quarter earnings report scheduled for release before the opening bell on October 19, 2010.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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