Option Bulls, Analysts See Triple Digits for Expedia, Inc. (EXPE)

Expedia Inc (EXPE) and Amgen, Inc (AMGN) inked a property deal

Apr 2, 2015 at 2:30 PM
facebook twitter linkedin

Expedia Inc (NASDAQ:EXPE) is 3.8% higher at $97.76 -- and earlier notched a fresh all-time high of $98.31 -- after Cowen and Company raised its price target on the stock to $115 from $90 while keeping its "outperform" opinion. What's more, the travel firm also announced it has agreed to purchase Amgen, Inc.'s (NASDAQ:AMGN) Seattle waterfront property(subscription required) for $228.9 million, which will serve as the company's new headquarters. On the charts, EXPE has been a long-term technical outperformer, with the shares up 33.1% year-over-year. In light of all this, some traders are betting on EXPE to continue its ascension to new highs, as call activity in the options pits is ramping up.

Drilling down, calls are exchanging hands at six times the average daily rate, and are outpacing puts by a roughly 2-to-1 margin. The day's most active contract by far is the May 105 call, where buy-to-open activity has been detected, per data from the International Securities Exchange (ISE). By purchasing this call, speculators expect the security to muscle its way north of the strike price by the close on Friday, May 15, when the option expires. EXPE has never been north of $100.

However, today's penchant for calls marks a change of pace in the options pits. EXPE's Schaeffer's put/call open interest ratio (SOIR) is 1.09, which sits in the 87th percentile of its annual range. Simply stated, short-term traders have rarely been this put-heavy over the past year. Looking elsewhere, short sellers have taken a shine to the security as well, as 11% of the stock's available float is sold short. Furthermore, it would take nearly eight sessions for these traders to cover their bets, at average trading volumes.

The brokerage bunch is mostly lukewarm on Expedia Inc (NASDAQ:EXPE) too. Specifically, 56% of covering analysts rate the stock a "hold" or worse. Additionally, EXPE's consensus 12-month price target of $91.36 sits well below current trading levels, suggesting additional price-target hikes and/or upgrades could be on the horizon.

Daily Chart of EXPE Since April 2014

Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!