Someone With Deep Pockets Is Getting the Travel Bug

Something significant could happen with Trip Advisor, as evidenced by a recent questionable purchase.

It’s close to that time of year when people start thinking about spring break, the beach and the warmth of the sun. And that means travel plans, which explains the current options activity that just popped up on Trip Advisor (Nasdaq: TRIP).

As you probably know, Trip Advisor facilitates hotel room bookings, airline reservations and cruise reservations. This past Thursday, two separate eyebrow-raising transactions crossed the tape:

  • First, 915 Trip Advisor January $40 calls traded for $1,647,000.
  • Then, 757 more Trip Advisor January $40 calls traded for $1,414,076.

The two buys occurred when the stock traded at $57.92 and $58.67.

Why would someone pay for such deep, in-the-money calls that expire one day after their purchase? Maybe they thought something big was happening today. After all, Trip Advisor has been a takeover candidate for years.

Or maybe they wanted to own a lot of Trip Advisor stock but wanted to wait to make a final decision after today’s trading session has ended.

Either way, something is certainly happening here that warrants monitoring. All told, 6,155 calls are currently sitting in open interest on the January $40 line, so it’ll be interesting to see whether any of these calls get “rolled out” to a later month.

If they do, that means the upside in Trip Advisor should continue – which could give us the green light to get involved. As you can see above, Trip Advisor has room up to $65, which might be the level our call buyer is targeting.


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