NEW YORK -- Hilton Worldwide
(HLT) saw call buying that turned a quick profit last week, and the bulls are coming back for more ahead of earnings results Friday morning.
Nearly 4,000 May 22 calls were purchased for 54 cents to 75 cents on Monday, according to OptionMonster's tracking systems. The volume was well above the strike's previous open interest of 926 contracts, indicating that new positions were established.
These long calls lock in the price where the stock can be purchased through the end of next week no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares drop.
The bullish trades followed call buying in the May 21 strike last Monday. Those contracts doubled in value by the end of the week even though the stock rose only 3.7% in that time, illustrating the leveraging potential of options.
Hilton shares were up 0.5% Monday to close at $22.16, just above their 50-day moving average. The hotel operator went public in December for $20 and has been range-bound mostly between $21 and $23 since then.
Total option volume in the name reached 6,175 Monday, more than five times its daily average for the last month. Only 162 of those contracts were puts, a reflection of the session's bullish sentiment.
Yamamoto has no positions in HLT.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts