Hotel chain Marriott International (MAR) is up nearly 30 percent over the past year. One trader is betting that shares will slide in the coming weeks.
That’s based on the December 15 $170 puts. With 37 days until expiration, 8,430 contracts traded compared to a prior open interest of 100, for an 84-fold rise in volume on the trade. The buyer of the puts paid $0.95 to make the bearish bet.
Marriott shares recently traded for about $191, so the stock would need to drop $21, or about 11 percent, for the option to move in-the-money. That would still be well over the stock’s 52-week low of $145.
The hotel chain has been performing well, with earnings up 20 percent over the past year, and revenues are up 11 percent. Marriott’s most impressive metric is its profit margin, which stands at a hefty 47 percent. Shares are fairly valued at about 20 times earnings.
Action to take: Shares have had a strong bounce higher in recent sessions following earnings. It’s likely there may be a slight pullback, but probably closer to the mid-$180 range. Marriott also pays a 1.1 percent dividend yield.
For traders, the December puts will likely see some mid-double-digit gains in the coming days as shares come off of their post-earnings bounce.
It’s likely that any pullback will be short lived, so traders should look to take quick profits or even make a call trade once that happens.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.