Unusual Options Activity: Expedia Inc (EXPE)

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  • Travel booking company Expedia (EXPE) has been trending higher in recent weeks, as signs point to more opportunities for travel in 2021. One trader sees the potential for shares to rise even further.

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  • That’s based on the March 2021 $130 calls. Over 4,300 of the contracts traded recently, a 36-fold rise in volume from the prior open interest of 119. The buyer paid about $12.75 for the options.

    With shares at $132, the options are already about $2.00 in-the-money. They should rise higher with the price of shares, less any declining time premium.

    Shares of the company are up about 18 percent in the past year, just slightly edging out the overall stock market’s return. That’s in spite of a 57 percent drop in the company’s revenue, and the fact that the company is currently unprofitable.

    Action to take: We like at-the-money and in-the-money trades. Given the strong uptrend in shares, traders will likely see mid double-digit gains on this option. The option strike date is a little short, and time premium decay could be an issue, so traders will need to keep a careful eye on shares to ensure they lock in a profit.

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  • The company next reports earnings in mid-February, so traders will likely see a jump in shares on any favorable numbers, allowing for the perfect exit point.