3:00pm: MLB.com's Jordan Bastian tweets that Terry Francona called Masterson to tell him that he isn't going to be traded this offseason.
10:21am: The Indians have yet to engage Masterson in extension talks, but those could come as part of the upcoming arbitration negotiations, MLB.com's Jordan Bastian notes. Cleveland is prepared to go with a one-year deal if necessary, he says (Twitter links).
8:56am: There are no legs to the Yankees-Masterson trade talks, a source tells ESPN's Buster Olney. He adds that Cleveland isn't close to trading Masterson or any other player at this time (Twitter links).
7:47am: The Indians are said to be open to listening to offers on Justin Masterson, and the Yankees have emerged as a possible suitor, according to Bob Nightengale of USA Today. Nightengale reports that the Yankees would be interested in acquiring Masterson in a deal involving Brett Gardner. A third team would likely be required, since the Indians don't have a need Gardner (Twitter links).
Indians GM Chris Antonetti indicated yesterday that he'd like to keep Masterson in Cleveland long-term, but acknowledged that he'd be willing to consider offers on just about any player. The Yankees appear to have a similar stance on Gardner -- a Tuesday report suggested the team would prefer to trade Ichiro Suzuki, but presumably the Yankees would have to consider moving Gardner if the price is right.
The Yankees aren't the only team reported to have a keen interest in landing Masterson. Joel Sherman of the New York Post said this morning that the Diamondbacks would "love" to find a way to acquire him from Cleveland.