Unusual Options Activity: Hilton Worldwide Holdings (HLT)

Shares of hotel operator Hilton Worldwide Holdings (HLT) are up 45 percent over the past year, significantly outperforming the overall market. One trader is betting on a further rally in the coming months.

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  • That’s based on the June $185 calls. With 101 days until expiration, 15,019 contracts traded compared to a prior open interest of 249, for a 60-fold rise in volume on the trade. The buyer of the calls paid $26.00 to make the bullish bet.

    Hilton shares recently broke to a new 52-week high of $206.65. The options are therefore about $22 in-the-money already, leaving about $4 left in time premium.

    While Hilton saw a drop in earnings growth last year, revenues rose by 7 percent. And the hotel sector has been holding up strong as consumers continue to spend on travel.

    That indicates that the uptrend in shares is likely to continue in the coming weeks and months.

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  • Action to take: Momentum investors may like Hilton shares here for further gains. Hilton pays a dividend of 0.3 percent, but has not raised it in the past year.

    For traders, the June $185 calls are already deep in-the-money. They may see mid-double-digit gains on a further rally.

    More aggressive traders can buy a cheaper option with a higher strike price to play the uptrend.


    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 company mentioned in this article.

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