Q2 STOCKS TO BUY

Short This Stock Before the Fed Meeting

TRIP stock hit an annual high earlier this week

Jun 8, 2018 at 2:02 PM
facebook X logo linkedin


TripAdvisor, Inc. (NASDAQ:TRIP) has put in a strong performance on the charts in 2018, up 61% to trade at $55.54, and not far from its June 5 annual high of $57.94. However, if history is any guide, it may be time to short -- or potentially buy protective put options -- on the travel stock ahead of next week's Fed meeting, where the fed funds futures are pricing in 91% probability of a rate hike (per CME Group).

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, TRIP has been one of the worst stocks to own after the Federal Open Market Committee (FOMC) raises interest rates, looking back to 2015. In fact, the equity wasn't higher on a week-over-week basis once following the last six rate hikes, averaging a one-week loss of 3.07%.

Given the stock's long-term technical tenacity, though, sentiment among options traders has been exceptionally bullish in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TRIP's 10-day call/put volume ratio of 2.79 ranks in the 72nd annual percentile, meaning calls have been bought to open over puts at an accelerated clip.

However, some of this call buying -- particularly at out-of-the-money strikes -- could be at the hands of short sellers hedging their bearish bets against any additional upside risk. More than 20 million TRIP shares are currently sold short, representing a lofty 19% of the stock's available float, or 4.3 times the average daily pace of trading.

Whatever the reason, it's an attractive time to purchase premium on TripAdvisor options. The stock's Schaeffer's Volatility Index (SVI) of 36% ranks in the 6th annual percentile, indicating short-term options are pricing in relatively low volatility expectations at the moment.

 
 

Which of These SUB-$5 Stocks Could 26x From Here? (AD)

He called a rare 11x on Tesla…

Then he called a 26x on Workhorse…

Then an even rarer 35x on Nio Inc…

Now Tim Bohen says these 5 tiny “America First” stocks are next up in 2025.

They’re trading for less than $5 right now.

But thanks to Elon & Trump’s new alliance…

They could be off to the races in Trump’s first 100 days.

And right now for a limited time…

You can get the names & tickers for just $1 here. (AD)

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

🚀 One Stock Pick Could Change Everything in 2025
What if one stock pick could define your success next year? Get 10 expert-vetted stocks set for 2025—plus 5 bonus picks to watch now. Get the Report →

🆕 New Options Need New Trading Strategies
Zero-DTE options are the newest (and hottest) options to trade.  Professional traders have rushed into the market and are making a mint.  Don’t get left behind - learn all about these options, how to trade them, market setups to profit from, plus much more. Download now →

👀 Revealed: 3 Defensive Stocks for Your Portfolio
Worried about the market? This free report reveals 3 under-the-radar defensive stocks for uncertain times in any kind of economy.

 

 
 

FREE Report Download

 

Follow us on X, Follow us on Twitter