Unusual Options Activity: Expedia (EXPE)

Shares of travel booking firm Expedia (EXPE) have been trading in a range for the past few months, but saw a drop to the bottom of their range on Monday. One trader sees the opportunity for a strong rebound in the months to come.

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  • That’s based on the November $180 calls. With 142 days until expiration, over 13,894 contracts traded hands, a 121-fold jump in volume from the prior open interest of 115. The buyer of the calls paid about $13.80 to make the trade.

    The buy comes as shares dove under $170 to around $165 per share, and are off from a 52-week high of $188 per share. However, shares of Expedia are already up 107 percent in the past year as investors have been betting on a rebound in tourism.

    Even with that rebound, the company’s financials are still pricing in the pandemic, with revenue down 43 percent over the past year and the company sitting on a loss.

    Action to take: Shares likely still have room to rise here, given the rise in tourism as the pandemic winds down. While shares don’t pay a dividend, the likelihood of their rising on strong earnings and a return to profitability for the company are likely.

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  • For options traders, the November $180 calls offer upside potential even if shares don’t break through to new all-time highs, and at a far lower expense than buying shares outright.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from the company mentioned in this article.