Wyndham Worldwide is reeling after equities sold off this
month, and now one investor thinks the volatility will die down.
optionMONSTER's tracking programs detected the sale of about
2,000 each in the October 29 calls and the October 29 puts. Both
priced for about $2.05 to $2.25, with dozens of small blocks
crossing out systems. Volume was more than 10 times open interest
The trade resulted in a credit of about $4.20, which the investor
will get to keep that money if the hotel and timeshare company
closes at $29 on expiration. Gains will erode on either side of
that level, but she or she will make some kind of profit as long
as it stays between about $25 and $33.
Known as a short straddle, the strategy is designed to profit
from option premiums falling over time. That happens normally
because of time decay, but will be amplified if implied
volatility declines. See our Education Section for more.
WYN rose 2.04 percent to $29.53 in morning trading. It had peaked
at $36 last month, which was its highest price in more than four
Overall options volume is about triple the daily average so far
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.