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November 21, 2009
- Subscriptions:
Host Hotels and Resorts (HST)
April 02, 2009ACTION:
Buy the HST July 5 Calls (HSTGA) for 90 cents or less
Dear OptionsTraders,
Options have exploded in Host Hotels & Resorts (HST) today, running 31-times normal activity. Although implied volatility is well over 120%, it is 30 points below historic volatility. Given the moves the stock has made recently, the options are somewhat underpriced.
Total open interest is less than 18,000 contracts: 9,597 calls and 8,235 puts. Today, more than 20,000 calls have traded versus 134 puts. Market participants have traded 19,000 HST July 5 Calls (HSTGA). The last time this many HST calls traded in the past year in a single day was … never.
Today's activity is four-times the amount of any single day call buying in HST. What is amazing about this situation is that it looks like we can buy the HST July 5 Calls for the same price the institutions did at around 90 cents. Usually, the institutions are able to get the first mover advantage and capture the best price.
We recommend buying to open the July 5 Calls (HSTGA) for 90 cents or less. If HST returns to where it started 2009, this position should triple in value.
Have a good day trading.
Nick Atkeson and Andrew Houghton
Editors
Options Trader
