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Schaeffer's Daily Option Blog Sees a Bounty of Call-Selling Activity

April traders bet on CTRP to stay pinned

by 3/22/2012 11:49 AM
Stocks quoted in this article: International, Ltd. (CTRP - 22.77) was hit with a barrage of call activity yesterday, as roughly 10,000 of these options were exchanged, which was five times the norm. The bulk of the action centered around the out-of-the-money April 24 strike, where close to 8,900 calls were traded -- most of them at the bid price, pointing to seller-fueled volume. Open interest at this strike surged by 6,983 contracts overnight, making it safe to assume that the majority of the volume was made up of new positions. This option now holds peak call open interest of 8,809 contracts. In order for the investors to achieve the maximum profit from these sold-to-open calls, the stock must remain below $24 through April expiration.

This rise in call activity on CTRP runs counter to the prevailing trend. The Schaeffer's put/call open interest ratio (SOIR) checks in at 1.46, conveying that puts comfortably outnumber calls among options expiring in three months. This ratio arrives in the 65th percentile of its annual range, which means that near-term options players are showing a healthier-than-usual appetite for puts over calls.

Further echoing this skeptical skew toward the travel and tourism concern is the fact that short interest on CTRP shot up by nearly 50% over the last two reporting periods. These bearish bets now represent a respectable 8% of the equity's available float.

From a technical perspective, CTRP has declined by close to 38% during the past 52 weeks, and has lagged the broader S&P 500 Index (SPX) by approximately 21% during the last 40 days. A look at the charts shows that the stock is in danger of finishing the session beneath $23 for the first time in about a month.

Nearing midday, CTRP is down about 1.7% and is trading at $22.77.


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