by Houghton and Atkeson 06/30/08
Trading in Expedia Inc. (EXPE) has a strong bearish tone today as investors bought 5,000 put option contracts this morning. Investors have purchased about 3,000 of the EXPE Oct 15 Puts (UEDVC) and about 1,000 of the EXPE Aug 15 Puts (UEDTC).
And this past Thursday, bearish investors were in the market selling 5,000 of the EXPE Oct 17.50 Calls. A slowing economy likely leads to slowing travel trends which, in turn, should cause Expedia to go lower.
Earlier this year, we saw the opposite when Expedia call buyers were scooping up bullish bets back in April and May.
In looking into the Expedia options activity, we noticed that our friends at ChangeWave.com have been negative on the stock for several weeks. Some of today's option activity could be driven by put buyers on the retail level, but we suspect there is more to it. This is especially true because the bearish tape action began late last week with institutional-sized footprints. The smart money agrees, EXPE is going lower.
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