Weekend Trader Series
August 28, 2022
Open Positions Update
- The Box (BOX) December 16, 2022, 27-strike call reaches its time-stop this Monday, August 29. Close the position at a limit price within range of the current market price when you place the order.
- Close the Microsoft (MSFT) October 21, 2022, 280-strike call on Monday, August 29. Close the position at a limit price within the range of the current market price when you place the order.
The following is this week's recommendation:
Expedia (EXPE)Place a limit order to buy the Expedia (EXPE) October 21, 2022 110-strike put at a limit price within range of the current market asked price when you place your order. At the close on Friday, August 26, this option was offered at $11.65. EXPE closed at $103.41 on Friday, August 26.Do not attempt to enter this position after Monday's close.Please use the following guidelines to manage the position:- Exit the position if the option is at a 100% gain from your entry price.
- If the option has not reached its target profit by 3:00 p.m. Eastern time on Monday, September 26, close the position.
- If there is a change to the above closeout parameters, we will notify you in your regular Sunday evening communication.
After a roughly 20% rally off their July low, the shares of Expedia (EXPE) are seeing failure at the 80-day moving average, as well as the site of the stock's May lows earlier this month. Just within this past week, the stock broke below a trendline connecting higher lows since July, and now EXPE sits back below the $109 region, which is half the equity's all-time high. Considering this technical backdrop, now looks like the perfect time to speculate on Expedia stock's next move with puts.
Short interest is sitting at multi-year lows of late, and recent short covering has done little to support the stock, pointing to underlying technical weakness. Short interest did tick higher during its most recent reporting period, however, which could be a risk to bulls should these shorts become aggressive.
Finally, our recommended October 110 put has a leverage ratio of -5.49, and will double in a 15.5% drop in the underlying equity.
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