Bears double money in $MAR

Losses in Marriott International have translated to big gains on downside option positions.

On Nov. 2, Investitute’s market scanners found that 6,000 Weekly $110 puts expiring on April 18 were purchased for $4.30 and $4.40 with shares at $120.67. This was clearly a new position, as open interest in the strike was a mere 19 contracts before that session began.

Those puts sold for $10.20 late this afternoon, more than twice their purchase prices. The stock fell 13.43% in the same time period, illustrating how options can far outperform moves in their underlying shares on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

MAR was down 2.07% to $104.19 today. The hotel operator missed quarterly revenue expectations in early November and dropped again at the end of the month after disclosing a massive security breach.