New Options Trading Offers Opportunities for Host Hotels Investors

Investors in Host Hotels & Resorts Inc (Symbol: HST) welcomed the start of new options trading today with contracts expiring on June 20. As options expire, their time value, which affects pricing, plays a crucial role. With 79 days remaining until expiration, these newly launched contracts present potential for traders of puts and calls to secure higher premiums than those available on contracts with shorter timeframes.

The Stock Options Channel has analyzed the HST options chain and highlighted one put and one call contract that stand out. The put contract with a $13.00 strike price currently has a bid of 20 cents. Should an investor sell-to-open this put contract, they would agree to purchase the stock at $13.00 but also collect the premium. This means their effective cost basis for the shares would drop to $12.80, before broker fees. For investors looking to acquire HST shares, this could be a more appealing option than purchasing shares at the current market price of $14.34.

Notably, the $13.00 strike price reflects around a 9% discount from the stock’s current trading price, indicating it is out-of-the-money by that percentage. Current analytical data, including the greeks and implied greeks, suggest there’s a 78% chance the put contract could expire worthless. Stock Options Channel will monitor these odds over time, providing updates through a chart on the contract detail page of their website. If the contract does expire without value, the premium would yield a return of 1.54% on the cash commitment, or an annualized return of 7.11%, which is referred to as the YieldBoost.

Below is a chart illustrating the trailing twelve-month trading history for Host Hotels & Resorts Inc, highlighting in green where the $13.00 strike price aligns with that history:

Switching to the call options, the $16.00 strike call contract currently holds a bid of 15 cents. If an investor buys shares of HST at the prevailing rate of $14.34 and sells-to-open the call contract as a “covered call,” they commit to sell the stock at $16.00. This transaction would also allow them to collect the premium, culminating in a total return of 12.62% if the stock is called away by the June 20 expiration, not accounting for dividends or broker fees. However, if HST shares rise significantly, potential gains might be unrealized, making it essential to analyze historical trading patterns for Host Hotels & Resorts Inc as well as the company’s fundamentals. Below is the chart depicting HST’s trading history, with the $16.00 strike shown in red:

The $16.00 strike price signifies about a 12% premium over the stock’s current trading value, which means there’s also a chance that this covered call could expire worthless. If that occurs, the investor would retain both the shares of stock and the premium collected. Present analytical data suggest there’s a 67% probability of this happening. Stock Options Channel continues to track these probabilities, offering updates and charts, including the trading history of the option contract. If the covered call contract expires worthless, it could provide an additional return of 1.05%, equivalent to an annualized return of 4.83%, also classified as YieldBoost.

The implied volatility for the put contract stands at 29%, while the call contract’s implied volatility is 27%. Meanwhile, after assessing the last 251 trading day closing values along with today’s price of $14.34, actual trailing twelve-month volatility is calculated to be 24%. To explore more viable put and call options, visit StockOptionsChannel.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.