Marriott International Inc (MAR) Puts Pop as Buyout Battle Intensifies

Anbang Insurance put in a fresh bid for Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT), topping Marriott International Inc's (NASDAQ:MAR) offer

by Karee Venema

Published on Mar 28, 2016 at 3:12 PM

The tug-of-war between Marriott International Inc (NASDAQ:MAR) and China's Anbang Insurance over Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT) is intensifying, with the latter boosting its buyout offer to nearly $14 million -- topping the upwardly revised bid made by MAR last week. Nevertheless, the stock is trading up 3.9% at $71.31 -- on track to snap a four-session losing streak -- thanks to a price-target hike to $75 from $73 at Baird, while options volume is running at an above-average clip.

Drilling down, total options volume is trading at 1.3 times the expected intraday clip, with calls having a slight lead over puts. Most active are MAR's April 67.50 put and 72.50 call, and data from the International Securities Exchange (ISE) points to the possible initiation of a long strangle. Elsewhere, it appears as if the stock's May 60 and 70 puts are being bought to open.

More broadly speaking, short-term speculators are more put-skewed than usual toward options expiring in three months or less. In fact, MAR's Schaeffer's put/call open interest ratio (SOIR) of 1.67 ranks higher than 76% of all comparable readings taken in the past year.

However, this metric accounts for options that have been both bought and sold to open, and by the looks of it, MAR speculators have been partial to put writing in recent sessions. Over the past 10 sessions, MAR speculators have sold to open 1.40 puts for each one they've purchased.

Specifically, Marriott International Inc's (NASDAQ:MAR) April 70 put has seen the biggest rise in open interest over this time frame, and, according to data from the major options exchanges, a number of these contracts have been sold to open. In other words, they are betting on $70 to serve as short-term support through front-month options expiration at the close on Friday, April 15.

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