Bulls want to stay at Starwood Hotels
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of 5,500 May 62.50 calls for $2.80 and the sale of an equal number of February 60 calls for $2. Volume was below open interest in the 60s, indicating that an existing position was rolled from one contract to the other.
The transaction cost $0.80 and gives the investor an additional three months while providing significant leverage potential. Because the 60s are in the money, he or she would have been forced to buy shares at the close today if the position hadn't been adjusted.
HOT is down 0.76 percent to $61.74 this afternoon but is up 22 percent in the last three months. The hotel operator has refused to back down from long-term resistance for the last three weeks, which could be leading some chart watchers to believe that a big rally is in the works.
Using options keeps costs low for traders, limiting their losses in case the stock falls. (See our Education section for more on how to manage risk.)
Almost 12,000 contracts have traded in the name so far today, which is quadruple the daily average. Calls outnumber puts by more than 90 to 1.