Unusual Options Activity: Hilton Worldwide Holdings (HLT)

Shares of hotel chain Hilton Worldwide Holdings (HLT) have been trading in a range over the past few months. One trader is betting that when shares do break out of their range, it will be higher.

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  • That’s based on the January 2023 $130 calls. With a whopping 548 days until expiration, over 6,250 contracts traded against a prior open interest of 142, for a 44-fold rise in volume. The buyer of the contracts paid about $14.70.

    Shares last traded around $117, so to move in-the-money, the stock would have to rally less than 10 percent in the next year and a half. The strike price is also just under the 52-week high of $133 for shares.

    Betting on a rebound in world travel, shares are up 53 percent in the past year, beating the S&P 500 by 20 points, even as the company is still reporting losses.

    Action to take: Investors may like shares here assuming the latest Covid variant fears die out as others have in recent months, as the company will likely continue outperforming as it moves to profitability. However, shares don’t pay a dividend, so this may be a better company to trade rather than own.

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  • For traders, the option is attractive, given how long it has to play out. The price is more than reasonable for the time left on the options, although traders may want to wait for a down day for travel and tourism names before buying to get the best price.

     

    Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.