Hilton Hotels Corp. (NYSE: HLT) opened at $33.75. So far today the stock has hit a low of $33.44 and a high of $33.80. As of 11:45 this morning, HLT is trading at $33.62, down $0.28 (-0.8%).After hitting a one year high of $38.00 in April, the stock has dipped slightly, bouncing off support a few times just below $34. Billionaire investor Carl Icahn dumped all of his HLT shares in the first quarter of this year, indicating sentiment that HLT is unlikely to rise above its previous high. In fact, the stock is breaking below its support line today, which is not a good sign. Recent technical indicators for HLT have been bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $40 range. HLT has never been above $40 and has shown resistance around $36 recently. This trade could be risky if the company's earnings (due out on July 31) impress, but even if that happens, HLT would have to break through the three tops it has already formed this year between $36 and $38 before this position would be in trouble.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls a position in HLT.
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Reader Comments (Page 1 of 1)
6-28-2007 @ 11:20AM
Michael Schneider said...
Carl Icahn items, including items about his holdings and his different investment style from warren Buffett are available free for those interested in the new billionaire Investors section (yellow label) at http://www.Barrelomoney.com. Section also includes items about investors like Eddie Lampert, Warren Buffett and Bill Gates.
Hilton was just recommended today by a star analyst on CBNC. Lodging trends are still going well he said. It may be too early to go negative on Hilton with a lot of holiday publicity coming up focused on summer travel. However, if there is a terror event or an oil related event the stock would take a hit.
7-03-2007 @ 6:25PM
Cushman said...
HLT bought out at $47 by BX. What were your thoughts when Option Call volume was obscene and buyout rumors all over the street?