Option traders have enjoyed a highly lucrative stay in Marriott International.
On Sept. 20, Investitute’s tracking systems detected the purchase of 5,000 January $105 calls for $7.20 as part of a bullish roll with shares at $107.65. This was clearly a new position, as volume was well above the strike’s open interest of 1,320 contracts.
Those calls were marked at $30.95 at the end of today’s session, more than 4 times their purchase price. The stock rallied 26.1 percent in the same time period, a large gain but still far below that of its options.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
MAR reached at 52-week high of $137.60 this morning but ended the day at $135.73, off 0.62 percent on the session. The hotel operator has climbed steadily since third-quarter earnings and revenue beat estimates in early November.