Historically Strong Priceline Group Inc (PCLN) Stares Down Short-Term Roadblock

Priceline Group Inc (PCLN) has historically outperformed in February, and option bulls are hoping for a repeat performance

Feb 1, 2017 at 12:08 PM
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Priceline Group Inc (NASDAQ:PCLN) has historically been the best stock to own in February, and notched an all-time high just last week. However, despite its technical strength, PCLN could be yet another stock facing headwinds after President Donald Trump's controversial immigration ban, which may discourage travel both to and from the U.S. In spite of this, Priceline option players have been betting on even higher highs for the travel stock.

Digging in, option traders on the major exchanges have had an increased appetite for PCLN calls over puts of late. PCLN's 10-day call/put volume ratio of 1.32 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is ranked in the 84th percentile of its annual range, indicating calls have been bought to open relative to puts at a faster-than-usual clip over the last two weeks.

What's more, PCLN's Schaeffer's put/call open interest ratio (SOIR) of 0.86 is docked in the 23rd percentile of its annual range, meaning near-term traders are more call-heavy than usual. Drilling down, PCLN's two top open interest positions are the front-month February 1,590 and 1,600 calls, with a collective 6,031 contracts outstanding. Those who purchased to open the calls expect PCLN to topple the strike price by expiration at the close on Friday, Feb. 17. Nevertheless, the heavy call open interest could act as a layer of resistance in the near term, as the hedges related to these bets are unwound.

What's more, this level could be reinforced by technical resistance, too. As touched upon, PCLN hit an all-time high of $1,605.47 last Friday, following a late-December bounce off its 100-day moving average. More recently, however, PCLN is trading down 0.6% today at $1,566.31, and is on pace to close south of its 10-day moving average for the first time since Jan. 3. Furthermore, it looks as though the shares could be staring up at a speed bump in the $1,580-$1,600 region, home to PCLN's early November highs.


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