Options Market Bets on More Big Earnings Moves From GRUB, EXPE Stocks

There's been some notable options activity on both GRUB and EXPE in recent days

by Josh Selway

Published on Feb 6, 2019 at 1:23 PM

Meal delivery firm GrubHub Inc (NYSE:GRUB) is scheduled to report earnings before the open tomorrow, Feb. 7, while travel expert Expedia Group Inc (NASDAQ:EXPE) will reveal its quarterly report after the close tomorrow. Ahead of the events, options traders are betting on double-digit swings from shares of both GRUB and EXPE.

Starting with GRUB, its post-earnings history is particularly volatile. The shares have posted an after-earnings swing of 8.4% or more in seven of the past eight quarters, including a 12% loss last quarter, and a 27.4% explosion this time last year. The security's average move after reports during this two-year time span has been 14.7%, and this time around the options market is pricing in an even more ambitious 21.0% move.

According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), call buying has remained clearly more popular than put buying. Looking closer, one trader may have initiated a call ratio spread last Friday by buying to open 1,000 February 81.50 calls while selling to open 2,000 February 88 calls. On the other hand, peak open interest resides at the February 65 put, where buy-to-open activity has been confirmed.

GrubHub stock recently took back its 50-day moving average, but would need to take out the 80-day moving average next if it wants to produce a substantial rally. The shares have seemingly found a foothold atop the $75 area, roughly half their September peak. At last check the security was trading up 0.9% at $80.60.

grub stock chart

For EXPE, options traders are pricing in a 10.5% swing for after earnings. In this quarter last year, the shares fell 15.5% after earnings, and on average they've moved 7.2% post-earnings during the past two years.

Sentiment among Expedia options traders has been bearish in recent weeks at the ISE, CBOE, and PHLX, where the 10-day put/call volume ratio is 1.71 -- ranking in the 86th annual percentile, showing a stronger-than-usual demand for long puts over calls. During this time frame the April 120 strike was the put that saw the largest increase in open interest, with notable buy-to-open activity occurring on Monday.

Expedia stock today is trading up 0.5% at $126.81, extending its positive momentum from recent weeks to go for its highest settlement since early November. The shares recently broke north out of a channel of lower highs and lows that began after their July high of $139.77.

expe stock price

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