Option Bulls Count On a Recovery for MakeMyTrip Limited (MMYT)

MakeMyTrip Limited (MMYT) is having its worst day in over four years

Jul 30, 2015 at 3:13 PM
facebook twitter linkedin

MakeMyTrip Limited (NASDAQ:MMYT) is staring at its worst session in more than four years, down 18.3% at $15.81. Earlier, the online travel stock landed on the short-sale restricted list, and also touched an annual low of $15. However, that hasn't stopped option traders from betting on a bounce.

At last check, MMYT calls are crossing at nine times the usual afternoon rate. Looking more closely, buy-to-open activity is transpiring at the in-the-money August 15 strike. Based on the volume-weighted average price (VWAP) of $1.26, these speculators anticipate the stock will muscle back atop breakeven at $16.26 (strike plus VWAP) by the close on Friday, Aug. 21, when front-month options expire.

Today's preference for long calls represents a break from the norm. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MMYT's 50-day put/call volume ratio rests at an annual peak of 1.85 -- with long puts nearly doubling calls. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.86 registers in the 94th percentile of its 12-month range, suggesting a stronger-than-usual preference for short-term puts over calls.

Option bears are probably happy with MakeMyTrip Limited's (NASDAQ:MMYT) collapse, which was sparked by an earnings miss. Looking back, this makes three consecutive quarterly reports that have sent the equity sharply lower in the ensuing session. In May, MMYT suffered a 13.6% single-day post-earnings loss, and in January, it tumbled 9.6%.

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners