Wyndham faces sideways trade

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Wyndham Worldwide has been meandering sideways for months, and one investor thinks it will continue to drift. WYN

optionMONSTER's tracking systems detected the sale of about 5,000 each in the May 31 calls for $1.20 and the May 30 puts for $1.50. Volume was more than 6 times open interest in both strikes.

The trade produced a credit of $2.70. Known as a "short strangle," it's designed to profit from the shares remaining between the two strike prices. Thanks to the income earned, however, they can endure a drop as low as $27.30 or a push to $33.70 without losing money.

WYN rose 0.23 percent to $30.53 in afternoon trading. The operator of hotels and time-shares beat forecasts the last time it reported earnings on Feb. 9, and has been a darling among investors since bottoming out near $3 in early 2009. Its brands include Ramada, Howard Johnson and Days Inn.

The stock has now returned to a level where it peaked and bounced several times in the second half of 2007, which could make some chart watchers expect a period of consolidation before it continues higher.

Total options volume in the name is 11 times greater than average.

(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: WYN

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