Starwood Hotels is facing a downside position as shares struggle to rebound.
optionMONSTER's Depth Charge system detected the sale of 2,966 August 65 puts for $0.22 and the purchase of 3,000 November 65 puts for $3.50. Volume was below previous open interest in the August contracts, which expire at the end of today's session, but above it in the November options.
The trader is apparently rolling long puts forward, paying a net $3.28 to stay in the trade for another three months. He or she could be using the options to protect a long-stock position or to make an outright bearish bet. Either way, these puts will rapidly lose value if shares remain above $65 through mid-November. (See our Education section)
HOT is down fractionally this afternoon to $65.18. The stock fell below its 50-day moving average yesterday and is now trying to hold above the 200-day line.
The hotel operator rallied after beating earnings expectations and raising guidance in its second-quarter report on July 25, but shares encountered resistance at the $69 level early this month and have been declining since.
Total option volume in Starwood today is already more than triple its full-session average. Overall puts outnumber calls by 12.5 to 1.
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