The shares of casino concern Wynn Resorts, Limited (NASDAQ:WYNN) are plummeting in afternoon trading, after The Wall Street Journal reported allegations of sexual misconduct by CEO Steve Wynn (subscription required). The billionaire has denied the rumors -- which include accusations that he forced employees to engage in sex acts -- blaming ex-wife Elaine Wynn, "with whom I am involved in a terrible and nasty lawsuit." As such, WYNN stock is down more than 7% today, and options volume is skyrocketing as bears speculate on more downside.
So far today, WYNN has seen roughly 30,000 puts change hands -- most of the volume coming immediately after the WSJ report. Put volume is running at five times the average intraday rate, and is already in the highest percentile of its annul range. Meanwhile, close to 29,000 WYNN call options have traded -- again, mostly in the past hour -- to run at four times the average intraday clip. The stock's 30-day at-the-money implied volatility is also soaring, and last stood at 44.2% -- at the top of its annual range.
Digging deeper, it appears some bears are buying to open the weekly 2/2 175-strike put, which is the most active put option so far, with over 3,000 contracts traded. By purchasing the puts to open, the buyers expect WYNN stock to breach $175 by the end of next week, when the options expire. Most of the call action appears attributable to the closing of a spread at the February 170 and 180 strikes.
At last check, Wynn Resorts shares were down 7% at $186.61, so it would take a downside move of about 6.2% from current levels in order for the aforementioned weekly puts to move into the money. Just yesterday, WYNN stock was exploring three-year highs, peaking at $203.63 in intraday trading. The security gapped higher to start the week, thanks to an earnings beat, but is now on track to erase nearly all of those gains.