Options Report: Unusual Hilton Options Activity
While Wall Street coasted into a sleepy pre-holiday finish on Tuesday, options in Hilton Hotels were actively traded as shares of Hilton rose more than 6% in the abbreviated trading session.
Over the holiday break Blackstone announced a $20 billion buyout of the company which valued shares at $47.50. Shares traded higher by more than 26% in the Thursday session.
"The trading was hyperactive," said Andrew Wilkinson, senior market analyst at Interactive Brokers. "There have been rumors about Hilton going back to November, but it's definitely odd and extremely suspicious how options activity picked up to a pace of 9-times normal volume on Tuesday."
One of the most fortuitous of trades would have been a purchase of August 40 Hilton calls, a bet that Hilton would rise to $40 or higher by expiration in August. More than 5,000 Hilton August 40 calls traded Tuesday after only 70 traded during the previous 11 trading sessions.
The August 40 calls finished the trading day Tuesday with an offer of 85 cents. Today those same calls are trading in the $5.70 range, meaning that if a speculator bought 100 of the call options Friday for $8,500 before commissions and exchange fees, those same options would be worth approximately $57,000 today.
Blackstoneand Hilton both declined to comment on the trading activity in Hilton shares and options.
A spokesperson for the Chicago Board Options Exchange said the Options Regulatory Surveillance Authority, which coordinates trading surveillance among the options exchanges, also had no comment.
The Securities and Exchange Commission's Public Affairs office refused to comment on the unusual options activity, or whether its was planning to launch an investigation.
Apple a $200 Stock?
Bullish bets in Apple calls continued to pay off as shares of Apple rose further into record territory on optimism the iPhone will reap big profits for the company.
Today the July Apple 130 calls are showing a one day gain of 71% as Apple rallies further. The July 135 calls are up 95% and July 140 calls surged to a 100% gain from Tuesday's close.
Beyond trading in the front month options, speculators continued to make bets that Apple will climb to $200 a share by Autumn. More than 3,000 November 200 calls have traded and more than 1,000 October 200 calls have also been traded - bets the stock will see $200 by expiration in October.