Bulls want to fly higher with Expedia


The bulls want to go places with Expedia, which has been holding its ground after a pullback last month.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 7,300 October 60 calls in the online travel company for roughly $4.30. Similar amounts were sold in the October 50 puts for $2.40 and the October 70 calls for $1.40. Volume was more than twice open interest in all three strikes, indicating that new positions were initiated.

Selling upside calls and downside puts generated additional income, lowering the trade's cost to just $0.50 per contract. The position is highly leveraged to gains in the share price, earning a maximum profit of 1,900 percent on a move to $70, but stands to lose money if the stock declines. (See our Education section for more about the opportunities and risks associate with selling options.)

EXPE fell 0.57 percent to $57.68 yesterday. It staged a huge rally between February 2011 and February 2013--more than tripling from below $20 to over $65--but has been drifting lower since. The shares gapped lower on April 26 after management warned of lower profit at its Hotwire business but have been trying to fight their way back this month.

Yesterday's investor may be willing to sell puts at the $50 level because that was a peak in June 2012, suggesting that it may now provide support. Total option volume was 8 times greater than average in the session, according to the Heat Seeker.

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