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Eleventh-Hour Traders Are Enamored with Ctrip.com International Calls

CTRP feels the love from front-month call players

by 1/20/2012 1:50 PM
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Bullish investors have shown a fondness for Ctrip.com International (CTRP - 27.76) today, as close to 4,700 calls have been exchanged so far, which is seven times the equity's expected intraday volume. At least 2,078 of these calls have been traded at the out-of-the-money January 2012 28 strike -- more than half of them at the ask price, signaling buyer-fueled activity. This option currently holds open interest of just 417 contracts, so it's safe to say that new last-minute positions are being initiated in this session.

This influx in call volume appears to be part of an ongoing trend for CTRP. Data pulled from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 7.89, confirming that calls bought to open have outnumbered puts by almost eight to one during the last two weeks. In fact, this ratio sits just five percentage points shy of a yearly acme, meaning that traders are snatching up bullish options over bearish at a near annual-high pace.

Meanwhile, short interest on the travel service provider dropped by 6.74% during the most recent reporting period. However, these bearish bets still account for a healthy 9.67% of CTRP's available float, which suggests that short sellers looking to hedge may be responsible for some of the aforementioned call volume. Either way, it would take almost seven days to buy back these shorted shares, at the stock's average daily trading volume.

From a technical perspective, CTRP is ahead by over 17% year-to-date, but has underperformed the broader S&P 500 Index (SPX) by roughly 28% during the past 60 sessions. A glance at the charts shows that the stock is poised to finish the week above resistance at its 10-week moving average for the first time since early November.

In the afternoon hours of the session, CTRP is up about 3.2% to wink at the $27.76 level.


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