Hilton Stock Tumbles Following Surprise Q4 Loss

The equity is still up nearly 43% over the last nine months

Assistant Editor
Feb 17, 2021 at 10:21 AM
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The shares of Hilton Hotels Corporation (NYSE: HLTare down 2.3% at $110.99 this morning, after the hotel chain reported fourth-quarter losses, which surprised analysts who anticipated a marginal profit. Revenue fell as well, with headwinds from Covid-19 causing a 59.2% year-over-year drop in comparable revenue per available room. 

Today's negative price action has Hilton stock testing support at its 10-day moving average -- a formerly resistant trendline it toppled in early February. The 30-day moving average, which has acted as a floor for HLT during the past couple weeks, continues to provide support on the charts Longer term, the equity has added 42.7% over the last nine months.

Option traders have been targeting calls with gusto. The security sports a 50-day call/put volume ratio of 2.59 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all but 2% of readings in its annual range. This suggests a heavier-than-usual appetite for long calls of late. Echoing this, HLT’s Schaeffer's put/call open interest ratio (SOIR) ratio stands higher than just 8% of readings from the past 12 months, indicating short-term option traders have rarely been more call-biased.

With earnings out of the way, now looks like the perfect time to enter on HLT with options amid a volatility crush. The security's Schaeffer's Volatility Index (SVI) of 39% sits in the extremely low 7th percentile of all other annual readings, meaning the stock sports attractively priced premiums at the moment.

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