Options Bulls Target Expedia Stock's Pre-Earnings Pop

Expedia is up 33% in the past 12 months

Digital Content Manager
Feb 10, 2022 at 11:53 AM
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Expedia Group Inc (NASDAQ:EXPE) is gearing up for its fourth-quarter earnings, due out after today's close. The shares are eyeing their highest close on record, last seen up 1.4% at $199.65, and earlier surged to a fresh peak of $201.41. This could mark EXPE's fifth-straight win, should these gains hold, with support at the 10-day moving average guiding the equity higher. Year-over-year, the stock is up 34.3%. 

expe feb 10

Options bulls are targeting the equity, with 8,545 calls across the tape so far -- double what is typically seen at this point. The most popular contract is the March 185 call, followed by the February 180 call. 

Today's bullish trading is unusual, considering the stock sports a 10-day put/call volume ratio of 1.06 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 85% of readings from the past year. In other words, puts are being picked up at a quicker-than-usual clip. 

A look at Expedia stock's post earnings past shows mixed results during the past two years. The security settled higher after four of these eight next-day sessions, which incudes a 15.6% pop following its November report. The stock has averaged a 6.8% post-earnings swing, regardless of direction, which is about half the 12.4% move the options pits are pricing in this time around. 

Despite its recent rise, short sellers have been piling on. Short interest rose 22.7% in the last two reporting periods, and the 9.46 million shares sold short make up 6.5% of the stock's available float. It would take a little under four days to buy back these bearish bets, at EXPE's average daily pace of trading. 

 

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