Strategy: Iron Condor
Buffer to strike: %14 (Call Side) 11.8% (Pur Side)
Max risk: 5% of account
Price at entry: 97.10
Put Spread: -85 +80
Call Strike: -110 +115
Min contracts: 1
Company description: WYNN is a resorts company that runs hotels and luxury resorts all over the world.
Implied volatility and probability: IV is 38.94 with probability of success at 81%. This is lower than the normal 90% but it is because this is an iron condor which yields twice as much as a normal spread but is exposed both on the up side as well as on the down side.
Support and resistance: There are two key support/resistance levels, one at 88 on the bottom end and one at 104.5 on the top end. There is also a middle level which is around where the current price level is:
Exit strategy: Ideally the trade will stay below the two key support levels and expire worthless for 100% return, at time of writing this has an 80% probability of success. I will exit one side of the trade if either of the strike levels are breached. This will incur a limited loss which will be subsidised by the other half of the trade as well as the natural resistance that a spread position provides. It will be rare to lose 100% on a spread position like this unless the option closes near expiry below one of the short strikes.
News and thoughts: The main reason why volatility has picked up with this trade is because WYNN has recently opened a new resort in macau traders were waiting for the reception of the new resort before deciding what to do with the stock. The new hotel cost 4.1bil WYNN has a total market cap of 10bil so this could make a big impact on the company but figures for this will not be known until well after this trade expires.