One investor sees little risk of a pullback when Starwood Hotels & Resorts reports earnings later this month.
optionMONSTER's monitoring programs detected the sale of about 2,200 August 55 puts against open interest of just 835 contracts. The initial blocks priced for $1.53, and then the selling pushed prices down to $1.51.
The put seller is now on the hook to buy shares of the hotelier for $55 if they're below that level on expiration, but at an entry price around $53.50 because of the credit received. Should it remain above that level, he or she will keep the premium and the contracts will expire worthless.
HOT is up 0.21 percent to $61.32 in morning trading and has been parked at long-term resistance in the low $60s for most of the year. Earnings have been consistently strong, and the next report is scheduled for before the bell on April 30.
Investors often write puts when they like a stock but don't want to expend capital buying shares--especially before a key event like quarterly results. (See our Education section for other strategies that make money from the passage of time rather than a directional move.)
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