Bouncing Wynn Shares might be primed for the 'wheel strategy'

From a valuation standpoint, Wynn is trading very close to its five-year historical averages across key metrics. With the next earnings report not scheduled until February, the stock has a clear runway free of binary fundamental catalysts, yet implied volatility remains surprisingly high. This environment makes buying options expensive and short premium strategies more attractive. In Barry Levinson's classic film Rain Man , Dustin Hoffman's character leans over to his brother in the middle of a blackjack hand with a simple piece of advice: bet two for good, one for bad.

Steve Wynn hasn't exactly been on a winning streak. No longer running his namesake company, he finally sold his 50 Central Park South penthouse after years on the market. WYNN shares haven't really been on a winning streak either. The stock is down more than 27% year-to-date as I write this. It was down more than 46% from the 2025 highs within the past couple of weeks. But it has bounced a bit since then, and perhaps the tables are turning.

Fundamentally, the business is demonstrating exceptional strength, particularly in the United States. Wynn's Las Vegas EBITDA margin has actually surpassed that of its Macau resorts. Recognizing this, management has accelerated capital spending in Las Vegas, where the company's profit has doubled from pre-pandemic levels. Meanwhile, the Asian market is also showing signs of life. Strategic property upgrades in Macau are successfully drawing lucrative premium mass play, which is directly supporting the company's ambitious expansion plans for the Enclave at Wynn Palace.

From a valuation standpoint, WYNN is trading very close to its five-year historical averages across key metrics, including P/E, EV/EBITDA (currently around 9x to 10x), and Price-to-Book Value. Although this represents a slight premium compared to the broader gaming industry mean, Wynn's justifies a premium. (The Encore, the newer of the two adjacent Las Vegas properties, is one of my preferred hotels on "The Strip"). Technically, the stock has admittedly been in a downtrend, but this recent sharp bounce off the late October lows may indicate the run is over. Several technical indicators—specifically the MACD, Fear & Greed Index, Commodity Channel Index (CCI), and several key Moving Averages—are now aligned, suggesting it may be time to go long.

So, how should traders play this setup?

With the next earnings report not scheduled until February, the stock has a clear runway free of binary fundamental catalysts, yet implied volatility remains surprisingly high. This environment makes buying options expensive and short premium strategies more attractive.

Rather than betting on the roulette wheel, traders should look once again to "the wheel" strategy. Something I discussed earlier this week on United Rentals. The strategy? Step one, sell cash-covered puts below the current market price to collect that inflated premium. If WYNN stays above your strike price through expiration, you keep the cash and repeat the process. If the stock dips and you are assigned, you acquire shares at a discount. Once assigned, you move to step two: selling covered calls against your new stock position to generate continuous income until the shares are eventually called away, after which you revert back to step one and play again. A methodical, high-probability way to get long a world-class operator while getting paid to wait.

Disclosures: Tidal owns/holds all the securities mentioned in the article.

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Bouncing Wynn Shares might be primed for the 'wheel strategy'

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