2 Eclipse Stocks That Could Defy Skeptics

EXPE and HLT have yet to win over skeptical options traders

Aug 17, 2017 at 2:57 PM
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Protective glasses, hotel reservations, and plane tickets are bought and booked for those planning on enjoying the total solar eclipse that will sweep the U.S. Monday afternoon. Most would assume that hotel and travel stocks are reaping the benefits of this once-in-a-lifetime astronomical wonder, as tourists swarm cities planted in the eclipse's "path of totality" -- where the moon will completely cover the sun -- from Salem, Oregon, to Charleston, South Carolina. Today we'll discuss how travel stock Expedia Inc (NASDAQ:EXPE) and hotel stock Hilton Worldwide Holdings Inc (NYSE:HLT) are faring ahead of the event.

Bears Could Soon Be Forced to Cover Expedia Shorts

Online travel stock Expedia is trading down 2.4% at $145.09 amid today's sell-off. Still, EXPE is up more than 28% year-to-date, and has remained in a steady long-term uptrend since January -- touching a record high of $161 on July 28. The travel stock is in the process of testing support at its 20-week moving average, which previously cushioned EXPE's November 2016 lows.

Near-term options players, however, have upped the bearish ante of late, as evidenced by the stock's 10-day put/call volume ratio of 2.42 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- just 2 percentage points from annual-high territory. In other words, option players have bought to open more than two EXPE puts for every one call during the past two weeks, which points to heavy skepticism on this uptrending stock.

What's more, there's also room for short covering on EXPE. Short interest on the stock has grown 10.6% over the past two reporting periods, and now represents eight times EXPE's daily average trading volume. A successful bounce from the stock's 20-week moving average could spark an unwinding of the heavily bearish bets levied against EXPE.

Hilton Worldwide Stock Flies Under the Radar

Hotel, motel, and cruise line stock Hilton Worldwide is also in the red today, trading down 2.2% at $61.04. HLT has spent the past week fighting to maintain a foothold above its 120-day moving average, which has contained most of HLT's pullbacks since the second quarter of 2016. From a broader perspective, HLT has gained 19.5% during the past 12 months, and hit a lifetime high of $67.79 on June 5.

Brokerage firms are on board with the uptrending hospitality name, as more than 70% of the 19 analysts following HLT rate it a "buy" or better. However, similar to EXPE, option players have favored buying puts over calls on the ISE, CBOE, and PHLX of late. The hotel stock's 10-day put/call volume ratio stands at 14.97, which ranks in the 92nd annual percentile. 

However, HLT's 10-day ratio is based on fairly light options activity. Total open interest on the stock stands at 41,342 contracts, according to Trade-Alert, which registers in the low 30th percentile of its annual range. So, despite HLT's move up to record highs in 2017, the stock appears to be almost completely off the radar of speculative players.

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