Wall Street Weighs In on Ctrip.com's New Stake

Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) hit its highest perch on record today, after unveiling a new stake in eLong, Inc. (ADR) (NASDAQ:LONG)​

May 22, 2015 at 11:38 AM
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Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) is soaring today -- up 14% at $82.09, and fresh off a record high of $82.82 -- after the company took over part of Expedia Inc's (NASDAQ:EXPE) stake in eLong, Inc. (ADR) (NASDAQ:LONG)​. The news is being well-received in all corners of Wall Street, with Raymond James boosting its outlook to "strong buy" from "market perform," and calls trading at five times the average intraday pace.

Short-term options are in high demand, as evidenced by CTRP's 30-day at-the-money implied volatility, which is up 11.9% at 36.8%. Specifically, the stock's June 80 and 81 calls have received notable attention, and it looks as if some of the activity is of the buy-to-open kind. If traders are indeed initiating new long positions here, the goal is for CTRP to extend today's rally, and settle north of the strikes at the close on Friday, June 19 -- when front-month options expire.

Widening the sentiment scope reveals puts buyers have been active in CTRP's options pits in recent months. In fact, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.93 sits just 2 percentage points from a 52-week peak. In other words, puts have been bought to open over calls at a near-annual-high clip.

On the charts, today's bull gap is just par for the stock's recent course, with shares of CTRP up 29% month-to-date -- thanks in part to a strong showing in the earnings confessional and a subsequent round of upbeat analysts notes in mid-May. Longer term, the security is boasting a year-to-date lead of 80%. As such, it's possible some of the recent put buying -- specifically at out-of-the-money strikes -- is a result of Ctrip.com International, Ltd. (NASDAQ:CTRP) shareholders protecting paper profits against an unexpected pullback.

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