Hotel owner and operator Hilton Worldwide Holdings (HLT) rose 44 percent in 2023, amid a strong demand for travel and tourism. One trader sees shares continuing to trend higher in the first quarter of 2024.
That’s based on the April $175 calls. With 109 days until expiration, 16,003 contracts traded compared to a prior open interest of 270, for a 59-fold rise in volume on the options trade. The buyer of the calls paid $14.70 to make the bullish bet.
Hilton recently traded for about $182, so the option already trades about $7.00 in-the-money. And with shares right near their 52-week highs, the option trade suggests a further rally ahead.
Operationally, the hotel has held up well, with revenues up 14 percent over the past year, and earnings up nearly 9 percent. Plus, Hilton has a 32 percent profit margin, indicating strong operations right now.
Action to take: Hilton shares are at 52-week highs and in an uptrend. That’s likely to continue. Shares look like a buy now to play that trend. At current prices, shares yield 0.3 percent.
For traders, the April $175 calls are pricey. But as they’re already far in-the-money, they stand a strong chance of not losing traders money.
From here, a further rally could mean mid-double-digit returns in the coming months, a reasonable return for a slow-moving, large-cap company.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.