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Wyndham draws downside trade

Chris McKhann (chris.mckhann@optionmonster.com)

An interesting trade is preparing for a possible pullback in Wyndham Worldwide as shares hold near highs.

Just over 4,500 WYN options change hands on the day, 20 times its daily average for the last month. One trade makes up almost all of that volume.

optionMONSTER systems show that a trader sold 1,000 January 82.50 calls for $1.75 and bought 3,000 January 67.50 puts for the ask price of $2.60. These are clearly new positions, as previous open interest in each strike was fewer than 100 contracts.

This could be an outright bearish play on WYN or a type of ratio collar hedge. In the latter case, the trader would be protecting long shares while staying positioned to profit from a rally. (See our Education section)

WYN is up 0.21 percent to $74.79 in midday trading. The hotel operator's shares have run up from $70 in the last three weeks and are just off their 52-week closing high of $75.70 posted in early March.

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