Shares of hotel chain Marriott International (MAR) have been in an uptrend over the past few months, with a big surge in recent weeks. One trader sees a potential move higher in the coming months.
That’s based on the July $160 calls. With 84 days until expiration, 7,003 contracts traded compared to a prior open interest of 158, for a 44-fold jump in volume on the contracts. The buyer of the calls paid $34.00 to get into the trade.
Shares of Marriott just went for about $190, meaning the calls are already about $30 in-the-money. They should move higher from here dollar-for-dollar with shares, which are already at all-time highs.
The hotel chain is now up about 30 percent over the past year. Thanks to a recovering travel industry, the company has gone from a valuation of 140 times earnings to 32 times forward earnings in the past year.
Action to take: Investors may like shares here, given their improving valuation and price momentum. However, the stock doesn’t pay a dividend at this time.
For traders, the calls look like an attractive play. Being deep in-the-money, they are a bit pricey, however. So traders might want to use a higher strike price to play a move higher in shares in the coming months.
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.