OptionsHouse

Options Trading News

October 14, 2013  Mon 12:22 PM CT

HST: SEE CHART GET CHAIN FIND STRATEGIES
Traders apparently fear a quick selloff in Host Hotels & Resorts.

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.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »