DailyPlay – Opening Trade (MAR) – August 25, 2023

MAR Bearish Opening Trade Signal

View MAR Trade

Strategy Details

Strategy: Long Put Vertical Spread

Direction: Bearish

Details: Buy to Open 8 Contracts Sept 15th $197.50/$187.50 Put Vertical Spread @ $2.58 Debit per contract.

Total Risk: This trade has a max risk of $2,064 (8 Contract x $258) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $258 to select the # shares for your portfolio.

Counter Trend Signal: This stock is neutral to bullish and is expected to break below an area of support.

1M/6M Trends: Neutral/Bullish

Technical Score: 9/10

OptionsPlay Score: 145

Stop Loss: @ $1.30 Credit (50% loss).

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Thursday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

Investment Rationale

With consumers spending selectively, travel has held up relatively well until now, but signs of deceleration are starting to creep in. Hotel RevPAR has meaningfully slowed across US, Europe and APAC regions. With Marriott’s global exposure, I see downside risks after its recent 52-week high print from a couple of weeks ago. The bearish trade has already started to be confirmed with a break below its key $200 support yesterday. My next downside target is $190, and a break below that would target $172. Trading at 22x next year’s earnings, while expecting only 10% EPS growth is expensive and reflects the highest valuation MAR has traded for in the past 10 years. I’m looking to potentially profit from further downside by buying the Sept $197.5/187.5 Put Vertical @ $2.58 Debit. With a hypothetical portfolio of $100,000, I recommend risking 2% of the portfolio’s value on this trade, which is 8 Contracts for a risk of $2,064. We will set our stop loss on the entire position to 50% of the premium paid of $1.30 Credit. 

MAR – Daily