Unusual Options Activity: Expedia Group (EXPE)

Shares of online travel agency Expedia Group (EXPE) has been trending down slightly in recent months as the market has largely priced in the reopening trade. However, one trader sees shares moving higher in the coming months.

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  • That’s based on the November $165 calls. Expiring in 129 days, over 12,810 contracts traded against a prior open interest of 205, for a 62-fold rise in volume. The buyer of the calls paid about $14.40 on average to make the trade.

    With shares around $162, they’re just slightly out-of-the-money, and well under the 52-week high for shares of $188.

    While the company is still unprofitable, shares are still up about 95 percent over the past year. It’s likely that the company will continue to move towards profitability as travel trends normalize.

    Even though the company has been losing money, there’s sufficient cash on the books for the company to continue navigating any further economic disruptions that may arise.

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  • Action to take: Shares are likely on track to move higher, but don’t pay a dividend, so investors may want to buy the near-the-money call option instead.

    The option has a good chance of moving in-the-money in the next few weeks on a rebound in shares, which could lead to mid-double-digit returns or better.

     

    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 any of the companies mentioned in this article.

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