Will TripAdvisor stay adrift in range?

By David Russell,

Shutterstock photo

One investor apparently thinks that TripAdvisor is going nowhere.

optionMONSTER's tracking systems detected the sale of about 5,500 contracts each in the April 30 puts for $1.25 and the April 35 calls for $0.75. Volume is more than 20 times open interest in both strikes.

The transaction resulted in a credit of $2, which the investor will keep as profit if TRIP closes between $30 and $35 on expiration. Gains will erode outside that range, turning to losses below $28 and above $37.

TRIP is down 2.17 percent to $31.53 in afternoon trading. The travel-advice service was spun off from Expedia in December and ran higher in January, but it gapped lower after a weak earnings report last month and has been staggering ever since.

Given that chart pattern, some investors may expect the stock to consolidate in a range over the intermediate term. Today's trade, known as a short strangle, is designed to exploit such a move. (See our Education section for more on market-neutral strategies that make money from the passage of time rather than a directional move.)

Overall option volume is 11 times greater than average so far today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: TRIP

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com