Option Traders React as TripAdvisor Inc, Priceline Group Inc Team Up

TripAdvisor Inc (NASDAQ:TRIP) and Priceline Group Inc (NASDAQ:PCLN) unveiled a new strategic booking partnership

Oct 14, 2015 at 11:43 AM
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A handful of equities are making big moves today, and TripAdvisor Inc (NASDAQ:TRIP) is one such name. The shares are up 21.8% at $81.20, after the company announced a strategic booking partnership with Priceline Group Inc (NASDAQ:PCLN). PCLN, meanwhile, is down 2% at $1,318.55.

The price action is likely being met with similar reactions in the options pits of both TRIP and PCLN. TRIP, for example, has seen an influx of bearish betting in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.84 ranks in the 63rd annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip.

Echoing this is TRIP's Schaeffer's put/call open interest ratio (SOIR) of 1.30, which rests above 78% of all similar readings taken in the past year. In other words, short-term speculators are more put-heavy than usual toward the stock.

This skepticism isn't too surprising, considering TripAdvisor Inc was staring at a 10.7% year-to-date deficit heading into today's trading. Thanks to today's bull gap, though -- which has the shares on track to close north of their 200-day moving average for the first time since July 27 -- call volume has soared to 30 times what's typically seen. 

Call buyers, meanwhile, have been increasing their presence in PCLN's options arena of late. Over the past two weeks, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio has grown to 1.35 from 1.12, and now ranks in the 83rd percentile of its annual range.

In the past 10 days, specifically, the equity's now-expired 10/2 1,270-strike call saw the largest rise in open interest. Drilling down on the front-month series -- which expires at this Friday's close -- peak call open interest is found at the October 1,500 strike. For those buying to open the calls, the goal is for PCLN to settle north of $1,500 at week's end -- in never-before-charted waters.

Technically speaking, Priceline Group Inc is up almost 16% on the year -- and, historically, turns in an impressive fourth-quarter performance. Amid today's slip, put volume is running at nearly two times the average intraday pace, with buy-to-open activity detected at the equity's October 1,300 strike. Regardless of where PCLN settles the week, though, the most any option buyer stands to lose is the initial premium paid.


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