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Bearish Bettors Take the Wheel on Ctrip.com

Put players wager on a deeper decline for CTRP

by 10/21/2011 1:45:28 PM
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Ctrip.com (CTRP - 31.95) saw 13 times its average daily put volume Thursday, with approximately 15,000 contracts crossing the tape. In contrast, under 2,000 calls changed hands throughout the trading day.

This preference for puts is backed by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Speculators on these exchanges bought to open 6,989 puts on CTRP yesterday, compared to 1,051 calls, which yielded a single-day put/call volume ratio of 6.65.

The equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 4.37 confirms that puts bought to open have quadrupled calls during the past two weeks. This ratio lands eight percentage points from an annual high, signaling that traders on these exchanges have seldom purchased bearish bets over bullish at a faster pace over the past year.

In the soon-to-expire front-month series of options, the most popular strike is CTRP's October 37 put. This in-the-money strike is home to 2,913 contracts. By contrast, peak call open interest consists of 1,077 contracts at the October 38 strike.

Elsewhere on Wall Street, short sellers seem to be upping the bearish ante. Short interest is up 5% over the most recent reporting period, and now accounts for 8% of the security's float. These bearish bets would take almost three days to unwind, at CTRP's average pace of trading.

The security is down slightly today, adding to its 20.6% year-to-date deficit, and staring up at the $32 level. After reaching a 2011 peak at $50.57 in April, CTRP plummeted to an annual low of $29.59 at the beginning of October.

Weekly

Given the stock's downtrodden performance on the charts, it's not too surprising to see the convergence of bearish options traders on CTRP. A continued submission by any bullish holdouts could drag the shares even lower.

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