NEW DIRECTIONAL PUT PLAYS
Starwood Hotels & Resorts - HOT - close: 74.18 change: -0.57
Stop Loss: 76.55
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.3 million
Entry on January -- at $---.--
Listed on January 10, 2014
Time Frame: Exit prior to earnings in mid February
New Positions: Yes, see below
Why We Like It:
HOT is in the services sector. According to a company press release, "Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 1,200 properties in 100 countries, and 181,400 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. RegisÂ®, The Luxury CollectionÂ®, WÂ®, WestinÂ®, Le MeridienÂ®, SheratonÂ®, Four PointsÂ® by Sheraton, AloftÂ®, and ElementÂ®. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands."
The company's most recent earnings report was October 28th. The company beat the bottom line estimate by a penny but missed the revenue number. Management then guided lower. Since then at least two analyst firms (UBS and JP Morgan) have downgraded shares of HOT. JPM said their downgrade was on valuation concerns. Other analysts have issued worries about how the strong dollar might hurt HOT's financials.
There are also concerns that Airbnb could be hurting the hotel business. Airbnb's growth has surged since it was founded back in 2008. Just four year later Airbnb announced their 10 millionth night booked. It may not be fair to say all 10 million of those would have gone to the hotel industry but certainly a good chunk of Airbnb's business has been stolen from more traditional lodging services.
Technically shares of HOT look weak. The point & figure chart is bearish and forecasting at $68 target (which could get worse). Today's breakdown under support near $75.00 looks ominous. The intraday low today was $74.06. Tonight I am suggesting a trigger to buy puts at $73.90. We will plan on exiting prior to HOT's earnings report in mid February.
Trigger @ $73.90
- Suggested Positions -
Buy the FEB $70 PUT (HOT150220P70) current ask $1.33
Option Format: symbol-year-month-day-call-strike