Jim Strugger's Marriott Options Trade

Speaking on Bloomberg Markets, Jim Strugger of MKM Holdings suggested a stock replacement strategy in Marriott International Inc MAR.

He thinks that Marriott is a suitable candidate for the strategy because it's trading almost 30 percent higher since November and it doesn't pay a big dividend. The company is going to report earnings on Wednesday and Strugger wants to reduce risk and replace the long stock position with a long position in the July 90/100 call spread. The call spread would cost him $2.70 and the break point for the trade is at $92.70 or approximately 6 percent above the current market price. If the stock jumps to $100 or higher, the trade is going to reach the maximal profit of $7.30.