EXPE – Expedia, Inc. – Online travel company, Expedia, popped up on our ‘hot by options volume’ market scanner in the first half of the trading day due to near-term activity in both calls and puts. Expedia’s shares surged 9.5% to touch an intraday high of $23.08 on news the firm reported earning second-quarter net income of $0.44 a share, which exceeded the average analyst forecast of $0.42 a share, after the closing bell on Thursday evening. EXPE’s shares are currently up 7.40% on the day at $22.63 as of 12:50 pm ET. Bullish players hoping to see Expedia’s shares extend gains scooped up approximately 1,100 now in-the-money calls at the August $22.5 strike for an average premium of $0.95 each. Call buyers stand ready to profit should the largest online travel company’s shares rally another 3.6% to surpass the average breakeven price of $23.45 by August expiration day. Meanwhile, August $22.5 strike put options were also in demand. Approximately 1,700 puts were purchased at the August $22.5 strike for an average premium of $0.98 apiece. Perhaps put buyers are long the stock and are attempting to lock in share price gains enjoyed post-earnings. In this scenario, downside protection kicks in should Expedia’s shares fall 4.9% from the current price to breach the breakeven point on the downside at $21.52 by expiration. Otherwise, investors may be buying the puts outright because they expect shares to reverse course ahead of expiration day next month. Expedia’s overall reading of options implied volatility shrank 13.6% to 38.60% post-earnings.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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