EXPE- OptionInvestor.com came out this weekend with a new CALL play on EXPE. Although I disagree I thought I would share their opinion.
EXPE - Expedia, Inc. $70.39 (+0.60 last week)
Company Summary: Expedia is a provider of online travel services for leisure and small business travelers, offering one-stop shopping and reservation services with real-time access to schedules, pricing and availability. The company's global travel marketplace includes direct-to-consumer Websites offering travel-planning services at Expedia.com, Expedia.co.uk, Expedia.de, Expedia.nl and Expedia.it. In addition, the company provides travel-planning services through its telephone call centers and through private label travel Websites through its WWTE business. WWTE is a division of Travelscape, Inc., one of EXPE's wholly owned subsidiaries.
Why We Like It: Travel-related stocks got pummeled throughout the months of December and January as economic uncertainty had bulls in this sector moving to the sidlelines ahead of earnings. But the earnings weren't as bad as expected and we've seen a fair amount of improvement in these stocks in recent weeks. Announcing earnings that handily beat analyst forecasts on February 5th, shares of EXPE initially sold off, trapping the bears below $60 and then promptly shooting skyward. After one more dip in the middle of February, EXPE has really been on a tear. First clearing the 200-dma, the next surge took the stock through the 50-dma (currently $64.98) and then through the $68 level this past week. What initially looked like short-covering, now appears to be genuine buying in anticipation of the stock's upcoming split. That's right, EXPE is due to split 2-for-1 on Monday, and that is likely part of the catalyst for the bullish action in the stock. What happens after the split is where the rubber meets the road. We don't want to enter before the split, and that means waiting until it is trading split adjusted on Tuesday. Over the past several days, EXPE has been finding support just above the $68 ($34 post-split) level, and we need that level to continue supporting the stock after the split. The 10-dma (currently $68.30) should reinforce that support level. Look for a dip and bounce from that level on Tuesday to provide the best entries. Should buyers continue to bid the stock after the split, momentum traders can consider new entries on a breakout over $71 ($35.50 post-split), so long as buying volume remains strong. Place stops initially at $67.50 ($33.75 post-split). Note that the push through the $70 level over the past two days has taken the stock through the PnF chart's bearish resistance line and the current column of X indicates substantial upside still to come. Our target for the play will be $77.50, where the stock found resistance in late November. We've listed pre-split option strikes for the play this weekend and will update them with post-split strikes on Tuesday.
*** March contracts expire in two weeks ***
BUY CALL MAR-70 UED-CN OI=4629 at $2.75 SL=1.25 BUY CALL APR-70*UED-DN OI=3047 at $5.00 SL=3.00 BUY CALL APR-75 UED-DO OI=2036 at $2.60 SL=1.25
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