A painful week for Host Hotels?
David Russell | firstname.lastname@example.org
optionMONSTER's Depth Charge monitoring program detected the purchase of more than 5,000 October 17 puts for $0.10 and $0.15. Volume was more than 15 times open interest at the strike, indicating that new positions were initiated.
These puts lock in the price where shares can be sold, so they have an inverse relationship to the stock price. Investors use them to hedge long holdings or to speculate on a drop. (See our Education section)
Today's activity stands out because the contracts were very cheap and expire this Friday. This suggests that traders think that there could be a sharp selloff in the near term--well before earnings are released on Nov. 5.
HST is off a penny to $17.90 in afternoon trading after moving sideways all year. It's been making higher lows along its 200-day moving average while remaining trapped around $19 to the upside. Officially organized as a real-estate investment trust, the stock has outperformed other REITs by a huge margin during that time.
Total option volume in the name is 8 times greater than average in the session, according to the Depth Charge. Overall puts outnumber calls by a bearish 144-to-1 ratio.