Host Hotels & Resorts has been grinding higher for the last
two years, and one trader is betting that it will hold its value
over the next month.
optionMONSTER's tracking systems detected the sale of 3,446
December 15 puts for $0.15 and $0.10 against open interest of 1,830
contracts. The trade pushed total option volume in the real-estate
investment trust to 5 times greater than average.
HST fell 0.37 percent to $16.36 yesterday. It has rallied 40
percent this year but spent much of that time trapped in the
$16-$17 range that provided both support and resistance since early
Selling puts allowed the investor to collect premium in return for
insuring HST against a big selloff. The strategy makes the most
sense in the final month before expiration because that's when
options lose value most quickly if the underlying stock fails to
move. (See our Education section)
The company's properties are used by the hotel industry, which has
been outperforming the broader market as the economy rebounds.
Stocks such as Marriott International and Wyndham Worldwide are up
50 percent and 53 percent in the last year versus a 9 percent move
in the S&P 500 over the same period. That could also give the
put seller confidence that HST will remain strong.
(Chart courtesy of tradeMONSTER)
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.
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