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Profits Reign for Wynn Resorts, Limited (WYNN) Stock

Wynn Resorts, Limited (NASDAQ:WYNN) shareholders keep hitting the jackpot. Today’s breakout is simply the latest turn in a profit-laced run. WYNN stock is up 72% year-to-date in what is turning out to be a runaway year for bulls. If the long line of rewarding breakouts that preceded today’s pop is any indication, big rewards are in store for those willing to roll the dice here.

Profits Reign for Wynn Resorts, Limited (WYNN) Stock
Profits Reign for Wynn Resorts, Limited (WYNN) Stock

Source: Aurlmas via Flickr (Modified)

To set up today’s trade idea nice and proper, let’s engage in some good old fashion technical analysis. We begin with the most important part of the chart — trend. Since the beginning of 2017, WYNN has been trending higher. And with few exceptions every dip has been bought, every breakout pursued.

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The relentless ascent has dragged the 20-day, 50-day and 200-day moving averages higher.

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Click to Enlarge

Source: OptionsAnalytix

Volume patterns are supporting buyers as well. Short of one hiccup on Monday, distribution days have been all but absent, suggesting sellers lack any real conviction of late.

For the past three weeks, WYNN stock has been in digestion mode. Periods of consolidation like we just experienced are healthy. They allow trigger happy bulls to take profits while new buyers enter the fray. While the stock slithers sideways, the 20-day moving average plays catch-up, which allows the stock to work off overbought conditions.

When the rest is over, POW! A breakout transpires. And with the broader stock market still firing on all cylinders, I see little reason why we can’t see follow through in the weeks ahead.

How to Win with a WYNN Call Spread

If you’re willing to bet WYNN goes the distance on this breakout, then buy the Nov $150/$160 bull call spread for $3.65. If the stock can rise above $160, you stand to gain a handsome reward of $6.35. Compared to the cost of $3.65, we’re talking about an attractive 174% potential return here.

As usual with debit spreads, the risk is limited to the initial investment, or $3.65. To minimize the damage, I suggest exiting if the stock breaks the $140 support zone.

As of this writing, Tyler Craig didn’t hold any positions in any of the aforementioned securities. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.

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