Shares of hotel proprietor Park Hotels & Resorts (PK) have been trading in a range for the past year. One trader sees some potential downside in the weeks ahead.
That’s based on the July $17.50 put. With 39 days until expiration, 6,748 contracts traded compared to a prior open interest of 149, for a 49-fold rise in volume on the trade. The buyer of the puts paid $0.73 to make the downside bet.
Share recently traded just over $18.50, so the stock would need to drop a little over 5 percent for the option to move in-the-money.
The stock has a previous 52-week low of about $15.50, so the options could potentially move to a price of $2.00 on a re-test of that low on any market selloff in the coming weeks.
Action to take: While revenue is up at the hotel chain over the past year, a potential economic slowdown could weigh on the company in the coming weeks. Investors may like shares closer to their 52-week low.
For traders, the puts are an inexpensive way to bet on further downside in the stock market in the coming weeks. Traders should look for mid-double-digit gains, or a strong down day for shares, to take some quick profits given how little time is left on the option.
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.