2 Outperforming Travel Stocks Sporting Attractive Options

Both stocks also just hit fresh annual highs

Managing Editor
Jun 20, 2018 at 11:53 AM
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Two travel stocks making notable moves this week are TripAdvisor Inc (NASDAQ:TRIP) and Sabre Corp (NASDAQ:SABR). Below, we will take a closer look at TRIP and SABR, how the pair have been faring on the charts, and why now may be an affordable time to bet on the travel stocks' next leg higher, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

Options Traders Should Target TRIP

TripAdvisor stock has been trending higher since its mid-November lows, and just yesterday touched a fresh annual high of $60.12. And though the travel concern was 4% lower at $58.86, at last check, it is still flirting with fresh highs near the $60 mark. TRIP is up 70% year-to-date.

Daily Chart of TRIP Since June 2017

Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the security with a 10-day put/call volume ratio of 3.03, ranking in the 74th percentile of its annual range. This suggests that TripAdvisor puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

Regardless, TripAdvisor stock's Schaeffer's Volatility Index (SVI) is docked at 35.1% -- in the 4th annual percentile, meaning premium on short-term contracts is relatively cheap at the moment, from a volatility perspective. According to White, the one other time TRIP was been trading near 52-week highs with its SVI ranked in the 20th annual percentile or lower since 2008, the stock was up more than 17.2% one month later. Another rally of this magnitude would put TripAdvisor shares above $68.51 -- into nearly two-year high territory.

Short Interest Plunges on SABR During Trend Higher

SABR stock has also been on a long-term trend higher, despite experiencing a series of brief pullbacks in February and mid-April. With support from the 20-day moving average, the stock has managed to gain 42% over the past nine months, and just last week touched a more than one-year high of $26.78. At last check, the travel name was slightly lower at $25.79.

Daily Chart of SABR With 20MA

Sabre stock's SVI is docked at 26.7% -- in the 13th annual percentile. According to White, the one other time SABR has been trading near 52-week highs with its SVI ranked in the 20th annual percentile or lower since 2008, the stock was up more than 10% one month later. Another rally of this magnitude would put Sabre shares above $28.38.

Short interest on SABR fell 14.3% during the past two reporting periods, and now represents 8.2% of the stock's total available float. At Sabre stock's average pace of trading, it would take more than two weeks for shorts to cover their bearish bets.
 

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