Pessimism toward the stock was waning on the Street
Late last week, Wynn Resorts Ltd. (NASDAQ: WYNN, Stock Forum) revealed that its fourth-quarter loss narrowed significantly to $5.2 million, or four cents per share, compared to its year-earlier deficit of $159.6 million, or $1.49 per share. Excluding items, the company earned eight cents per share, with net revenue jumping 32% to $809.3 million. However, though the casino concern’s quarterly sales beat the consensus estimate of $785 million, its per-share figures fell short of the Street's forecast for earnings of 13 cents.
Technically speaking, the shares of WYNN shook off their initial earnings-related losses to finish in the black last week. From a longer-term perspective, the stock's downward momentum may have been limited by its 32-week moving average, which is lingering in the $62 neighborhood. This intermediate-term trendline contained most of WYNN's pullbacks in mid-2009, and could once again act as a technical foothold for the equity.
Ahead of WYNN's turn in the earnings confessional, it appears that pessimism toward the stock was waning on the Street. Since peaking in late 2009, short interest on the equity has subsided significantly, declining by 12.3% during just the past month. Now, fewer than eight million WYNN shares remain dedicated to short interest, as opposed to almost 10 million at the start of the year.
In that same vein, option buyers on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have been flocking to the stock's calls at a faster clip than usual lately. During the past 10 sessions, WYNN has racked up a call/put volume ratio of 1.25, in the 60th annual percentile. In other words, during the past couple of weeks, traders on the ISE and CBOE have bought to open WYNN calls over puts at an unusually rapid rate.
Nevertheless, puts still outnumber calls among options slated to expire within three months, as indicated by the security’s Schaeffer’s put/call open interest ratio (SOIR) of 1.27, in the 48th annual percentile. The round-number 60 strike is most popular among front-month traders, with roughly 9,850 puts outstanding. In fact, this heavy accumulation of put open interest could serve as an added layer of options-related support in the near term, should the shares of WYNN breach support at their 32-week trendline.
Disclosure: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column.
