by Houghton and Atkeson 05/29/08
On April 1, we wrote about unusual call buying in Expedia (EXPE). The stock jumped from $22.10 to about $25 over the next few trading sessions.
Two months passed and the stock drifted back down to the low $20s. Yesterday, the options activity exploded, with investors buying 11,000 EXPE June 25 Call (UEDFE) contracts along with thousands of contracts in the EXPE June 22.50 Calls (UEDFX) and EXPE June 20 Calls (UEDFD). During the day, 25,000 total call contracts were traded; this is relative to 8,000 on April 1.
Today, with the stock up more than 6%, there is some follow-through with further buying of the EXPE July 25 Calls (UEDGE). Clearly, options investors strongly believe there is an upside event for EXPE that will occur before June 20 options expiration.
For more fresh options trading ideas from Andrew and Nick, click here.
Sam Collins
FAST is now consolidating and recently flashed a buy signal from our internal indicator.
Options Expiration Adds Volatility
The opening looks to be higher but today is options expiration day, and anything could happen.
Chances are high stocks will sell off further, but be alert for a dead-cat bounce after such a dramatic breakdown.
Traders and longer-term investors should sell any new positions at the first opportunity and short ETFs on a temporary recovery in the market.
CAT, the blue-chip of its industry, is the first to attract attention when it's time to dress up a portfolio.
