The casino stocks powered higher again on Friday and are showing some good momentum right now. Wynn Resorts (WYNN, $60.40, up $13.90) kept the ball rolling by announcing good 3Q results despite lousy Las Vegas revenues.

The company reported a profit of $51 million, or $0.49/ share, up from $45 million, or $0.41/ share, a year ago. Revenue jumped nearly 18% to $769 million, helped by the surge of nearly 37% at the properties of Wynn Macau (China) which contributed $475 million. Overall, Wall Street had expected earnings of $0.59/ share on revenue of $747 million.

Although Wynn missed on their numbers, the conference call was upbeat, and again, the short positions in some of these stocks are huge. The call options for Wynn Resorts have exploded over the last few days and some of you have made some nice gains. The November 40 calls (UWYKH, $18.50, up $11.40) jumped another 160% while the January 2010 40 calls (YPWAH, $23.20, up $8.00) could have been purchased for $2.35 and $10.20, respectively. Obviously, the November calls have performed much better than the January 2010 calls but the longer-term calls were used as insurance in case the November calls didn’t go our way.

In other news, MGM Mirage (MGM, $16.46, up $1.09) priced $750 million of senior secured notes, which wil help reduce liquidity worries. The November 10 calls (MGMKB, $6.90, up $1.20) were profiled at $2.00 and have also been a huge winner for us. The January 2010 10 calls (YDMAX, $10.00, up $1.25) were going for $4.00 in my original write-up of the casino stocks and they have also done well.

Las Vegas Sands (LVS, $14.19, up $3.81) was perhaps the most heavily shorted stock of the group, and man, did we hit the jackpot with these call options. The November 10 calls (LJJKB, $5.00, up $2.40) were going for 50 cents, yes 50 cents, and are up 10-fold. The January 2010 10 calls (LNUAB, $8.35, up $2.75) were going for $2.20 and they are up nearly 300%. Wow.

Boyd Gaming (BYD, $6.80, up $1.05) also chipped in with some incredible returns. The November 5 calls (BYDKA, $2.25, up $1.00) were going for 20 cents and were up another 80% on Friday. The January 5 calls (WWAAA, $3.60, up $0.95) were going for $1.60 and have easily doubled.

Pinnacle Entertainment (PNK, $5.60, up $0.75) has also done well but I had mentioned that those options are thinly traded.

If you are in any of these positions, scale back on the November calls by closing 50%-75% of your contracts and at least half of your January positions. The ride has been fun but you have to protect your profits and start preparing for the next trades. These options may continue to do well and we will still enjoy even more gains if the casino stocks extend their rally this week.

Rick Rouse