Starwood Hotels Call Options Heat Up As Shares Extend Gains
by Option Review - December 6th, 2012 2:57 pm
Today’s tickers: HOT, VMW & ANR
HOT - Starwood Hotels & Resorts Worldwide, Inc. – Upside call buying on one of the world’s largest hotel and leisure companies today indicates some options traders are positioning for shares in Starwood Hotels & Resorts Worldwide to continue moving higher during the next couple of weeks. Shares in Starwood are up better than 2% this afternoon to stand at $54.09 as of 12:25 p.m. ET. The stock has been trending higher in recent weeks, up 7.7% since mid-November, following a sharp 18% pullback from a six-month high of $61.09 in September down to as low as $50.42 on November 15th. Options players preparing for shares in Starwood Hotels to continue to gain ground in the near term purchased 2,000 calls at the Dec. $55 strike for an average premium of $0.30 apiece. Call buyers may profit at expiration in the event that HOT’s shares rally another 2.2% over the current price of $54.09 to exceed the average breakeven point at $55.30 at December expiration. Overall options volume on the stock today is noteworthy, with nearly 9,000 contracts in play versus the Starwood’s average daily options volume of around 2,300 contracts. The bulk of the trading traffic is in upside calls, driving the call-to-put ratio up to 19-to-1 in the first half of the trading session.
VMW - VMware, Inc. – Shares in the provider of cloud infrastructure solutions are moving higher on Thursday, currently up 1.6% on the day at $91.76 just after midday on the East Coast. Bursts of front-month put buying on VMware this morning suggests one or more strategists may be locking in recent gains in the price of the underlying. Shares in the name have increased roughly 13% since the end of October. Volume in VMW options is heaviest at the Dec. $85 strike, where upwards of 5,500 puts changed hands against open interest of 1,869 contracts. It looks like most of the volume was purchased at the start of the session for an average premium of $0.95 apiece. Put buyers may be hedging long…
Options Combo Play Portends Youku Pullback Next Week
by Option Review - March 9th, 2012 1:32 pm
Today’s tickers: YOKU, SWHC & HOT
YOKU - Youku Inc. – Shares in the largest video-sharing website in China have been going gangbusters since the start of the New Year, but a stock and option combination play on Youku Inc. this morning suggests fortunes may reverse when the Beijing-based Company reports fourth-quarter results next week. The stock has rallied 60.0% year-to-date, gaining 4.6% in today’s session to touch an intraday high of $25.90. At first glance, the large 9,231-lot Mar. $28/$30 debit call spread purchased for a premium of $0.45 per contract on YOKU looks like a bullish bet on the Internet stock. However, the sale of 120,003 shares of the underlying stock at $25.40 each linked to the call spread on a 13 delta paints a different picture. Rather than a bet YOKU will extend its run up, the call spread appears to be a hedge against that outcome. The bearish player is limiting losses faced on the upside while positioning to profit on the short stock leg of the transaction if shares in the video-sharing site slump going forward. YOKU reports earnings on Wednesday of next week after the close.
SWHC - Smith & Wesson Holding Corp. – Gun manufacturer, Smith & Wesson Holding Corp., reported better-than-expected third-quarter earnings and raised full year net sales guidance after the bell on Thursday, sending shares in the name up as much as 25.0% to an intraday- and fresh 2-year high of $7.09 this morning. It looks like some options strategists who initiated bullish positions on the stock earlier in the week are making a killing today. One trader appears to be taking profits and establishing a new bullish stance on Smith & Wesson in the April expiry calls. Open interest patterns suggest the options player originally picked up 500…
Private Equity Chatter Drives Bullish Activity In HOT Call Options
by Option Review - November 2nd, 2011 1:10 pm
Today’s tickers: HOT, QCOM, XRT & GRMN
HOT - Starwood Hotels & Resorts Worldwide Inc. – Call options on the owner and operator of brand-name, upscale, full service hotels, including W®, Westin® and Le Meridien®, are changing hands at a rapid clip this morning. Shares in the hotel and leisure company rallied sharply on Wednesday, rising as much as 7.7% to an intraday high of $52.05 in the first half of the session. HOT calls may be active on renewed private equity takeover chatter, according to flyonthewall.com. Indeed, it does seem many players populating Starwood options today are positioning for the price of the underlying to rally substantially by year end. Trading traffic is heaviest at the Nov. $55 strike, where more than 10,400 calls changed hands against open interest of 1,974 contracts. It looks like most of these call options were purchased for an average premium of $0.60 per contract. Bulls long the calls profit at expiration if shares in Starwood Hotels rally another 6.8% over today’s high of $52.05 to surpass the average breakeven price of $55.60. Call volume is heavy in the December contract, as well. Traders appear to have purchased more than 1,300 calls at the Dec. $55 strike for an average premium of $1.39 each, and picked up another 760 call options up at the Dec. $57.5 strike at an average premium of $0.73 a-pop. Higher-strike call buyers may profit at December expiration in the event that HOT’s shares jump 11.9% to exceed the average breakeven point on the upside at $58.23. Investors have exchanged more than 27,000 option contracts on the stock as of 11:30 am in New York.
QCOM - Qualcomm, Inc. – Large prints in Qualcomm call and put options appear to be the work of an investor putting the strangle-hold on the stock heading into the company’s fourth-quarter earnings report after the close of trading today. The short strangle benefits the trader most if the stock trades within a range of $50.00 and $52.50 at expiration in a couple of weeks. Shares in QCOM rose 2.8% to $51.55 in the first half of the session. It looks like the strangle-strategist sold 10,000 calls at the Nov. $52.5 strike for a premium of $1.70 each, and sold 10,000 puts at the lower Nov. $50 strike at a premium of $1.50 apiece. Premium pocketed on the position amounts to $3.20 per contract. The investor may keep the…
Where Did All the Volatility Go?
by Option Review - June 11th, 2009 4:36 pm
Today’s tickers: VIX, EEM, XLU, EWT, AA, ESLR, UNH, HOT & DE
XLU – The utilities ETF has experienced a more than 2.5% increase in shares to $28.02. The XLU ticker symbol jumped onto our ‘most active by options volume’ market scanner after one investor sunk his teeth into a chunk of put options in the September contract.…