Back in January we looked at a stock that was not following the broader market. Checking back in I noticed it is still a bit of an outlier. When we looked at Marriott (MAR) at the end of January, (read the article here) we noticed that it was sticking to its 50 day moving average. In spite of some serious broader market gravity, it is still hugging the 50 and just moved above it. The recent drop gives it the appearance of a potentially declining stock, but the longer trend shows that it is more of a rebel than it is getting credit for.
So here is the move to watch. If (capital i and f) it can continue to find support at its 50 day, it should keep crawling up and defying the broader gravity. It is definitely not going to be a rocket ship by any means but using an option could create some good leverage and produce a potentially generous return. Hell, in this market I would be happy with a modest return.
Since this is not a fast mover, we want more time for this trade to play out. Looking at an October Call with a 180 strike, it is showing 7.60 this morning. In this wild market I would consider watching for that confirm of support at the 50, take a smaller position, (half to a third of what I would normally take) and see if this plays out.
Using longer term options is a great way to increase your chances of the position becoming profitable. It does increase the premium a bit, but like many things you get what you pay for. Andy Chambers outlines other ways that using longer term options can be a secret weapon in his Market Propulsion solution. If you want to see how he takes advantage of their often overlooked strengths, click here.
Keep learning and trade wisely,
Market Wealth Daily