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This Volatile “Roller Coaster” Stock Is an Option Trader’s Dream

This Volatile “Roller Coaster” Stock Is an Option Trader’s Dream

More than anything, I’ll never forget all the care that was put into the little details.

The architecture, the chocolate fountains, the massive rooms. They even rotated their flowers practically every day.

It was my first trip to Las Vegas back in 2010 and I was blown away at how above and beyond the hotels were designed.

Maybe it was because we stayed at one of the nicest resorts in Nevada, the Wynn Resorts (NYSE: WYNN) hotel and casino.

I didn’t play many slots or blackjack, myself. I was busy carrying my one-year-old son around in the björn.

But the crowds in Vegas were busy for sure. As a “boots on the ground” observation, it was clear the stock was set to take off.

And it did. It shot up more than 100% over the next 12 months.

But the years since have not been as kind…

WYNN has been hugely volatile, swinging from highs of $250, all the way back down to double digits, and returning to nearly $200 before tanking again.

Through it all, this glamorous hotel in the heart of Las Vegas is up just 40% over a decade.

If you count dividends, which you’d have picked up along the way, you’d be up about 100%.

Just remember that price moves faster than yield. The stock was up 100% in just 12 months after my trip without having to wait more than 10 years for the same return.

The rest of the decade, the stock was extremely volatile…

And when the pandemic hit, it hurt an already struggling business. Mass shutdowns meant nobody was staying at Wynn’s resorts.

From the pandemic-crash lows though, the stock saw yet another triple-digit rally.

And now, once again, the stock has started to pull back and is trading at a pivotal price level.

I know what you must be thinking… This stock is ripe for trading opportunities.

So in today’s Bank It or Tank It video, I’ll revisit my favorite Vegas hotel and let you know what to expect from the stock from here.

Turn Your Images On

Some people will look to avoid a stock like Wynn Resorts.

It’s not easy to be along for the ride on this stock. It literally looks like a roller coaster.

But stocks like this that are constantly on the move, up or down, are perfect for trading options.

That’s because even though we have to be right about the direction, we also need the stock to move fast to make up for a decaying option value. A stock that trends sideways for weeks would erode your potential returns.

I don’t see that happening with Wynn Resorts. And it’s a key trait I look for in stocks I trade options on.

So don’t let a volatile stock scare you away from trading it. They’re some of the best ones to trade, and offer the biggest potential returns.

Regards,

Chad Shoop, CMT
Editor, Quick Hit Profits

Chart of the Day:
A Huge Earnings Breakout

By Mike Merson, Managing Editor, True Options Masters

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(Click here to view larger image.)

After a huge earnings beat on Tuesday, PANW opened over 13% higher and didn’t look back, only adding to those gains on Wednesday.Today’s chart is of cybersecurity company Palo Alto Networks (NYSE: PANW), which just had a mega breakout to all-time highs.

And just look at that volume spike… The daily volume on PANW looks to be about triple its highest days over the previous year. And high-volume breakouts are a good sign of those gains sticking.

As we showed a few weeks back with Pepsi (Nasdaq: PEP), stocks making huge breakouts on earnings tend to hold on to those gains.

But that doesn’t mean you shouldn’t expect volatility.

I’d be surprised for PANW to just keep tacking on gains day after day, especially if the broad market experiences some volatility. It’s a bit overbought on the RSI indicator, and could use some cooling off.

Bold traders could try a small put options position on this one, with a plan to take profits or cut losses quickly.

Regards,

Mike Merson
Managing Editor, True Options Masters

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