Starwood Hotels and Resorts have fallen steadily since hitting a nine-month high a week ago, but a volatility trader is looking for the stock to make a sharp move in either direction.
HOT ended the day down 1.15 percent at $55.74, its lowest close since March 12. It has fallen each of the last seven sessions since hitting $59.10 on March 27, its highest price since July 2011.
Yesterday's option volume, which was twice the daily average in the name, was led by the May 55 puts. A trader bought 3,800 of those contracts for the ask price of $1.96, according to optionMONSTER's Depth Charge system. The previous open interest was 647, so this was a new opening position.
A minute after the puts were bought, a block of 140,000 shares of HOT was purchased for $56.21. The puts and the long stock combine to create an overall neutral position that could profit if Starwood rises or falls sharply from here, similar to a straddle . (See our Education section)
More From optionMONSTER
Happy demi-anniversary, stock market rally. Will the honeymoon ever end?