It’s been a while since I’ve bought any stock. I’ve been busy over at Options Hunting, using my on-hand cash to sell options. One of those options expired with the assignment of 100 shares to me. As of last Friday, I’m the proud owner of 100 Wynn Resorts (NASDAQ: WYNN) shares.
Wynn Resorts and Las Vegas Sands have both been stocks I’ve watched this year. I sold a very short-term (3-day) cash secured put against Wynn Resorts last week. It seemed like a sure thing, but options never are.
Wynn Resorts Option
The full details of the option can be found here. I sold a put with a $98 strike price. 3 days later, the contract expired. At expiration, Wynn Resorts stock was trading at $93.37. I was paid a $111.29 premium. This took my breakeven price from $98 down to $96.79 per share.
$96.79 minus $93.37 equals $3.42. This means I paid $3.42 per share, times 100 shares. I paid $342 more dollars for 100 shares of Wynn Resorts stock than market price. This sucks. It’s not fun to pay $98 dollars per share for a stock trading at $93.37.
Wynn Resorts Next Steps
When I started selling options, I knew I wouldn’t win every contract. This contract is an example of a loss, but a pretty minor one. I could’ve carried my contract over and sold a new one at breakeven or at a small profit.I choose to take these shares instead. I did this because Wynn is an ideal options stock. Wynn stock is volatile enough to create valuable premiums.
My plan is to sell a few covered calls on my Wynn shares. I should be able to easily make more than my $340 loss within a few covered calls. I’ll also have the upside of collecting at least one $50 dividend.
Every option I sell is sold with the intention of the contract expiring worthless. Because of this, I didn’t expect to buy Wynn shares. I’m not disappointed that I own Wynn stock, but I would’ve waited for a price range in the mid $80’s before buying. I’m not sure if I’ll keep this stock for a long-time. But for now, I’m happy to sell calls and collect dividends.
Do you own any gaming stocks?
Latest posts by Investment Hunting (see all)
- Stock Buy – 100 More Shares of VFC Corp - January 22, 2017
- Building A Diversified Investment Portfolio With Lending Club - January 19, 2017
- Why You Need to be Playing Financial Offense This Year - January 16, 2017