Hilton (NYSE: HLT) volatility and volume elevated prior to Blackstone paying $26 billion. HLT announced Blackstone Group (NYSE: BX) will acquire all the outstanding common stock of HLT for $47.50 per share. HLT closed at $36.05. I reported near the close of trading on 7/3/07 "option volume & volatility Elevated as HLT rallies 6%." HLT total volume of 32,490 contracts and HLT July option implied volatility of 39 was aggressive, above its 26-week average of 31 according to Track Data, suggesting larger risk.

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Costco Wholesale (NASDAQ:COST), which has 23 million members, got a bullish take from Barron's last week.

Despite its large size, the company continues to grow nicely. Earnings are expected to increase at 10%+ annually and same-store sales continue to be strong.

Could Costco be a buyout candidate?

Perhaps. The company has a rock solid balance sheet, with $2 billion in cash. It also owns about 78% of its stores. This should make it easy to raise a lot of debt to get a deal done.

And with the high valuation of Equity Office Properties Trust (NYSE:EOP) buyout, there should be some interested buyers.

In the meantime, Costco still looks good as a standalone investment. Hey, even Warren Buffett's Berkshire Hathaway (NYSE:BRK.A) owns 5 million shares.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

It's a good week for Sam Zell, who sold Equity Office Properties Trust (NYSE: EOP) for $39 billion. In all, he takes about $900 million. At age 65, he is certainly a veteran player of the real estate game.

One of his peers, Steven Roth – who is the CEO of Vornado Realty Trust (NYSE: VNO) – is 64 years old. He dropped out of the bidding for EOP because he thought the valuation was too rich.

And, today, another Old Guard real estate mogul, Mortimer Zuckerman, is taking money off the table. He is the chairman of Boston Properties Inc. (NYSE: BXP) and is 68 years old.

According to an SEC filing, he is selling roughly $75 million of his stock.

But, despite all of this, Blackstone's real estate chief, Jonathan Gray, was willing to buy EOP – which is likely to have a big impact on real estate valuations.

His age: 37.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

In the bidding for Equity Office Properties Trust (NYSE: EOP), there are two offers. One is from Blackstone and it is all cash. The higher bid, which is a combination of cash and stock, is from Vornado Realty Trust (NYSE: VNO).

Last week, EOP's board rejected the Vornado offer. The board was not thrilled that it would take at least three months to close the deal.

But Vornado is now making an interesting tweak: that is, the company will pay its cash faster. This is according to the Wall Street Journal.

However, it will still likely take a month, because there will be a tender offer. And, of course, the equity payment will still take at least three months, because of approvals and filings.

All in all, it's not much of a change and is likely that the EOP board will reject this offer too. But what about EOP shareholders? What might they do in this week's vote? They may actually prefer Vornado's higher bid.

In other words, the move from Vornado does look particularly savvy -- and, in fact, could force Blackstone to increase its bid yet again.

EOP's current stock price is $55.24, which is above Blackstone's all-cash offer of $54.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.