Buy Alert: December 10, 2012

Marcus Haber | December 10, 2012

Buy Alert: December 10, 2012

Trade Details

Buy Wynn Resorts (WYNN) January 2013 $100 Puts for $1.16 or better

Why?

WYNN is a nearly ideal stock for taking a downside position on the market. For one, the company’s recent earnings have been somewhat disappointing, yet the stock still trades at a rich P/E of 21x. If the market corrects, overvalued stocks like this one tend to get hit the hardest.

Plus, WYNN is sitting right above the 50-day moving average. If the stock breaches this level as expected, it could easily fall to the 200-day moving average in a hurry.

Even better, WYNN is a high beta stock. That means if the market sells off, WYNN should drop even farther.

Basically, I expect WYNN to fall to the 200-day moving average by January expiration. And, if the market sells off sharply, it could drop significantly more.

Let’s grabs some January puts on WYNN.