Put Players Pounce as Tripadvisor Inc (TRIP) Plummets Post-Earnings

Shares of Tripadvisor Inc (TRIP) plunged to a multi-year low in the wake of its quarterly earnings report

Nov 9, 2016 at 3:11 PM
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Travel stock Tripadvisor Inc (NASDAQ:TRIP) is spiraling today in the wake of the firm's third-quarter earnings report. The company posted revenue for the period that missed analysts' estimates, leading Goldman Sachs, RBC, and SunTrust Robinson to lower their price targets on the stock to $43, $50, and $58, respectively. TRIP shares were last spotted 18.7% lower at $51.33 -- hitting a three-year low of $51.17 earlier -- and stock volume has already notched a fresh annual peak of 14.5 million shares traded. Meanwhile, with TRIP on the short-sale restricted list, the stock's put options are flying off the shelves.

Specifically, TRIP puts are changing hands at six times the expected intraday rate -- with 10,146 puts traded, compared to 8,401 calls. Accounting for much of today's options action appears to be some type of spread with the November 58.50 and 59.50 puts and 71 and 72.50 calls -- though it's unclear how this is unfolding. Meanwhile, it looks like some traders may be buying to open the weekly 11/11 55-strike put, betting on TRIP to sustain its losses through the end of the week, when the weekly series expires.

More broadly speaking, TRIP is no stranger to put-heavy activity among short-term options traders. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.86 ranks higher than 71% of the past year's readings. What's more, the stock's front-month gamma-weighted SOIR clocks in at 1.24, with put open interest outweighing call open interest among near-the-money options in the November series.

Outside of the options pits, pessimism is also running high. Short interest on the stock topped out at a two-year high last month, and although these bearish bets have been on the decline, they still represent nearly 14% of TRIP's available float. Analysts haven't exactly been in TRIP's bullish corner, either, as echoed by today's price-target cuts. With 17 brokerage firms following the stock, all but one rate the shares a "hold" or worse. Plus, the security has only earned more bearish attention of late.

Of course, all this pessimism is understandable when considering Tripadvisor Inc's (NASDAQ:TRIP) technical performance. The shares have shed roughly 40% of their value year-to-date. Plus, heading into today's session, the stock had spent the last few months in a tight sideways pattern, with stiff resistance from the 200-day average bearing down since early June.

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