Marriott Bounces Back After Breach

Marriott suffered a huge data breach according to some reports. As we can see it scared the bulls to death. The stock reverted 2 standard deviations back to the mean and then dropped another 2 standard deviations. Like most events of this type we can expect this to blow over. We can see that it bounced hard off the lower Bollinger Band. This also gives us a sign that the long term damage is not being seen by the markets. January 18 options are about 50 days away which gives the stock more than enough time to bounce back. After entering this trade we set a GTC order to close at 25% of max profit. Overall we managed to pull out  a 12.6% return on invested capital (margin of $332) the next trading day after entering. The size of this bounce was surprising as Marriott bounced back above the mean in almost no time. The stock was on an upward trajectory prior to the news and the overall market has turned bullish. Most likely it will continue upward to the upper Bollinger Band.

Opening Trade

Sold 1 MAR 01/18/19 Put 115.00 @ 4.20
Filled at: Nov 30, 2018 10:13:06 AM EST

Bought 1 MAR 01/18/19 Put 110.00 @ 2.50
Filled at: Nov 30, 2018 10:13:06 AM EST

 Credit 1.70

Closing Trade

Bought 1 MAR 01/18/19 Put 115.00 @ 2.77
Filled at: Dec 3, 2018 10:10:17 AM EST

Sold 1 MAR 01/18/19 Put 110.00 @ 1.49
Filled at: Dec 3, 2018 10:10:17 AM EST

Debit 1.28

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.