Hotel owner and operator Marriott (MAR) dropped nearly 5% after slightly missing on its earnings. One trader sees a rebound in the months ahead.
That’s based on the June $270 calls. With 127 days until expiration, 12,244 contracts traded compared to a prior open interest of 135, for a 91-fold rise in volume on the trade. The buyer of the calls paid $30.80 to make the bullish bet.
Marriott shares recently traded for about $290, meaning the $270 calls are already $20 in-the-money. The strike price of the option is slightly off Marriott’s 52-week high of $307.52.
Despite the decline in shares, Marriott is still in a strong uptrend over the past year. And overall earnings beat expectations, although the company warned about potentially softer conditions ahead.
Revenues are up over the past year, as consumers continue to spend on experiences such as vacations. And Marriott posted a profit margin of 42%.
Action to take: Investors may like shares following the recent drop, as Marriott could resume its longer-term uptrend in the weeks ahead and continue higher.
At current prices, Marriott also pays a 0.8% dividend, which it has a history of raising over time.
For traders, the June $270 calls could see double-digit returns, but being deeply in the money, more aggressive traders may want to use a higher strike price and look for a bigger percentage gain.
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.