Options Trading News

A large bearish strategy is targeting Starwood Hotels & Resorts.

HOT trades at $54.64, up 1.17 percent on the day. Since reaching a 52-week high of $60.81 in early May, shares have been mostly range-bound between $48 and $56.

Today's option volume in the name tops 31,000 contracts, about 10 times its daily average. The action is almost entirely in one three-way trade.

optionMONSTER's systems show that a trader bought 10,000 November 50 puts for $2 while selling 10,000 September 60 calls for $0.26 and 10,000 September 48 puts for $0.45. The volume at all three strikes is more than open interest, so this is a new combination trade, not a roll forward.

The trader is buying the November options that face less time decay and selling the nearer-term calls and puts to offset the cost. The maximum gain comes if HOT is down at $48 at expiration. While it could be a hedge, it is very unlikely given that the put spread is so tight. (See our Education section)