Wyndham draws hedging strategy near highs

By
A A A

One trader wants protection on Wyndham Worldwide with the hotel stock near all-time highs.

optionMONSTER's Depth Charge monitoring system detected the purchase of 2,500 August 43 puts for $2.65. Equal-sized blocks were sold at the same time in the August 38 puts for $1.05 and the August 47 calls for $1.80. Volume was above open interest in all three strikes.

The transaction resulted in a credit of $0.20 and will earn a maximum profit of $5 if WYN closes at or below $38 on expiration. It was probably the work of an investor seeking to guard against a pullback. He or she is also now obligated to exit their position for $47 if it closes above that level on expiration.

WYN fell 0.09 percent to $44.64 on Friday, and is up almost 50 percent in the last six months. The company has been riding a wave of strong earnings reports and stock buybacks. It's also enjoyed an inflow of capital because it has typically traded at lower multiples than industry rivals.

The stock broke above its mid-2007 highs around $39 in January. Some chart watchers may now expect a pullback to that old level -- an event Friday's strategy would hedge against.
Overall options volume in WYN was almost quadruple the daily average in the session.



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: WYN

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

56,834,794
    $15.52 unch
47,736,761
  • $94.72 ▲ 0.83%
41,992,984
  • $2.47 ▲ 11.76%
40,893,734
  • $34.7901 ▲ 2.14%
39,324,803
  • $69.27 ▼ 0.19%
39,276,613
  • $7.28 ▲ 2.68%
39,084,483
  • $44.83 ▼ 0.01%
33,527,212
  • $26.02 ▲ 0.15%
As of 7/22/2014, 04:03 PM