Lodging platform app Airbnb (ABNB) has been trending up since it first went public late last year. Following better than expected earnings, shares have been trending higher. One trader sees a further move ahead.
That’s based on the June $210 calls. With 94 days until expiration, over 9,200 contracts traded, a 49-fold rise in volume from the prior open interest of 187. The buyer paid about $24.50 for the calls.
Shares are just around $200, so they would need to rally just over 5 percent from here to move in-the-money. But shares would need to rally strongly to about $235 to make a profit at expiration. Shares have traded as high as $220 before pulling back, so a move higher from here looks likely to retest that high.
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While the company is not yet profitable, it was one of the largest IPOs of 2020. The company has moved higher as part of a pandemic reopening trend in markets in recent months.
Action to take: The option looks attractive for a mid-to-high double-digit gain. While shares are up since the IPO, they haven’t had an explosion higher, and one is unlikely to occur now unless the company makes a surprise profit.
Traders should look for a quick profit, and to exit before expiration. The company next reports earnings in late May, just before the options expire.