Bulls Look for Fast Money in Starwood
Starwood Hotels & Resorts Worldwide drew short-term bullish option trades yesterda after announcing global expansion plans.
More than 13,000 March 65 calls traded in a strong buying pattern yesterday for prices ranging from $0.07 to $0.34, according to OptionMonster's real-time tracking systems. The volume was almost 10 times higher than the strike's open interest before the session began, indicating that these are new purchases.
Starwood shares rose 0.61 percent to $62.94 yesterday, not far from a two-year high of $63.45 reached on Feb. 15. The stock has faced resistance around the $64 level going back to August 2007.
The shares rose after Starwood said yesterday that will add 50 luxury hotels over the next five years in 12 countries. The announcement was made ahead of the company's investor day in Dubai tomorrow.
The calls purchased yesterday, which lock in the price where traders can buy the stock, are betting that HOT will rise above $65. But these contracts expire at the end of this week, so the shares will need to move quickly for the options to turn a profit and avoid expiring worthless.
The call buying pushed total option volume in the name to 22,575 contracts, 7 times its daily average for the last month. Calls outnumbered puts by more than 9 to 1, a reflection of the session's bullish sentiment.
—By CNBC Contributor Mike Yamamoto
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Mike Yamamoto is the managing editor of OptionMonster. Yamamoto has no positions in HOT.