Vote of confidence in Host Hotels

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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.

HST 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 2008.

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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: HST , MAR , WYN

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