Options Activity Alert: MTN, TRIP, CS

MTN – Vail Resorts, Inc. – Shares in ski resort operator, Vail Resorts, Inc., dropped sharply on Tuesday after the company posted a larger-than-expected first-quarter loss and warned it may miss its projected earnings target for the year. The stock currently trades down 9.2% on the day at $50.70 as of 11:00 a.m. in New York, the lowest level since August. Rising open interest levels and a review of time and sales data for transactions in MTN front-month put options on Monday indicates some strategists were anticipating the stock may pullback after earnings. Bearish players appear to have purchased around 200 puts at the Dec. $52.5 strike for an average premium of $0.65 each and more than 350 put options at the Dec. $55 strike at an average premium of $1.48 apiece. Traders prepared for Vail Resorts to hit an icy patch find the value of their contracts have more than tripled overnight, with premium on the $52.5 and $55 strike contracts rising to $2.50 and $4.60 apiece, respectively, as of 11:15 a.m. ET on Tuesday morning. Finally, traders also appear to be selling upside calls on Vail, with around 225 of the Dec. $57.5 strike calls hitting the bid price of $0.05 in the early going.

TRIP – TripAdvisor, Inc. – Shares in online travel company, TripAdvisor, Inc., are on the decline today, trading down 3.75% at $36.28 as of 11:30 a.m. ET. Upside call buying on the stock, however, suggests some strategists are positioning for the price of the underlying to rebound ahead of December expiration. Options volume on TRIP today is greatest in the front month calls, with heavy trading traffic in the $38 and $39 strike contracts. Traders exchanged some 1,400 call options at the Dec. $38 strike and another 1,100 lots at the higher Dec. $39 strike. It looks like most of these calls were purchased earlier in the trading session at average premiums of $0.65 and $0.40 apiece, respectively. Traders long the $38 strike calls stand ready to profit at expiration in the event that TRIP’s shares rally at least 6.5% over the current price of $36.28 to surpass the average breakeven point at $38.65, while buyers of the $39 strike calls require a minimum 8.6% upside move in the stock price in order to breakeven at $39.40 by December expiration. TRIP’s shares are down more than 30% off a 52-week high of $47.81, but are up nearly 40% since the start of 2012. Options volume in excess of 4,800 contracts before midday on TripAdvisor is noteworthy given the stock’s average daily options volume of around 1,860 contracts.

CS – Credit Suisse Group – Call options on financial services group, Credit Suisse, are active today as shares in the name rally to their highest level since mid-October. The stock is currently hovering near session highs, up 2.25% on the day at $24.15 as of midday in New York. In-the-money calls are the most active contracts on CS today, with around 4,100 lots in play at the Jan. 2013 $23.97 strike versus previously existing open interest of 907 contracts. It looks like most of the volume was purchased in the first 30 minutes of the session for an average premium of $1.13 apiece. Call buyers may profit at expiration should shares in Credit Suisse rally another 4% over the current price of $24.15 to exceed the average breakeven point at $25.10.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

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