On Monday, we saw unusual options activity in Host Hotels & Resorts (NYSE: HST) a Real Estate Investment Trust holding properties in the US and internationally. Currently trading in a 52-week range of $15.60-$20.90, shares are up over 7% year to date in 2014 having outperformed the broader market.
Monday’s session saw a trader come in and buy 5,427 HST April 21 Calls for $0.30. With the potential to control over 500,000 shares, this is a very bullish trade and one of several big block trades we saw hit the tape in HST (HST calls out traded puts at a ratio of over 200:1). Monday saw over 22 times the average daily option volume trade in HST. This trader is speculating HST will be trading above $21.21 (his or her break-even, $0.57 or just 2.7% above current levels) in 9 days upon April expiration.
HST would appear to set up well for a speculative long – the stock is trading above the Ichimoku Cloud and is just off its 52-week high. Traders wishing to follow this institutional order could look to the May or July expiration options for slower time decay, or to a spread to reduce their long premium exposure.
