Expedia Group (EXPE), the online travel platform, had the second-highest Vol/OI (volume-to-open-interest) ratio on Wednesday at 116.53. Only Unity Software (U) was higher at 160.96.
As is often the case when few triple-digit Vol/OI ratios appear, total options volume was 63.85 million yesterday, only marginally higher than the 90-day average of 63.1 million.
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After covering Royal Caribbean Cruises (RCL) yesterday, travel stocks are top of mind, so I’ll focus today’s unusual options activity on Expedia.
It’s been a while since I’ve covered Expedia—nineteen months, in fact. In January 2021, I discussed why selling the unusually active June 20/2025 $135 put option was a good idea if you were bullish about Expedia and the travel industry.
At the time, its share price was around $172. It’s up 53%, an annualized return of 34%. That’s more than reasonable.
If you sold the put for income and hoped to buy shares at the $135 strike price, you might have been assigned because it hit a low of $130.01 on April 7, 2025. Either way, you would have made money on the transaction.
Fast forward to yesterday’s unusually active put option. The options flow for the March 19/2027 $220 put sends mixed messages.
Here’s why.
The Option in Question
The put's 15,033 volume accounted for just under 40% of the stock’s total options volume that day (37,770), which was 6.9 times the 30-day average. Further, the daily volume was the fourth-highest in the past 24 months. In other words, a big deal.
When I recommended selling the EXPE put in January 2025, it had to fall by 22% in 141 days to buy 100 shares at a lower price, possibly. To do the same on the March 19/2027 $220 put, the share price would only have to fall 18% in 177 days.
Given the run it’s been on, I'm not as enthusiastic about my recommendation of selling the put for income and possibly buying the shares for less because it could fall further than $220 in that timeframe, perhaps even below $200.
Looking at the put’s options flow from yesterday, you could get both a bullish and bearish take from it. But first, we need to untangle the trades.
The Options Flow for March 19/2027 $220 Put
As I said earlier, the total volume for the March 19/2027 $220 put was 15,033. As you can see above, the trades total 24,973. However, you’ll notice that two of the trades were cancelled, leaving one trade of 4,991 contracts at 10:46:26 a.m. ET.
The cancelled trades show that the 15,033 volume for the March 19/2027 $220 put is too high. The open interest after all of these trades was 129. Excluding the five trades, there were 51 contracts traded yesterday. If you add together 129 and 51 and 4,991, you get 5,171, about one-third of what was reported in the unusual options activity data. That’s about what the open interest is showing this morning as I write this.
The 4,991-contract trade left after the two cancelled $220 put trades was a multi-leg trade. The other side of the trade was a March 19/2027 $330 call. Like the puts, two trades were cancelled, leaving the 4,991-contract trade at 10:46:26 a.m. ET, a perfect match. ET, a perfect match.
Here are the two remaining trades. They point to two potential options strategies.
Bullish or Bearish EXPE?
The first possible options strategy is a Long Strangle, which is neither bullish nor bearish, but direction-neutral; a bet that volatility will increase over the next six months. The data above is from this morning.
The long strangle involves buying a long call above the share price and buying a long put below the share price. The hope is that the stock moves up or down significantly by expiration. The strategy makes money if the share price at expiration, in this instance, is above $362.50 or below $187.50.
The maximum loss is the net debit of $32.50 (12.33% of the share price), while the maximum profit is unlimited above the upside breakeven. If the share price is $400 on March 19/2027, the profit is $3,750 per contract [$400 share price - $330 strike price - $32.50 net debit * 100].
In yesterday’s multi-leg trade, the institution’s net debit and maximum loss were $31.85, or $15.9 million [$31.85 net debit * 4,991 contracts * 100]. The upside breakeven was $361.85, while the downside breakeven was $118.15.
If the share price is $400 at expiration, the profit is $38.15, or $19.04 million [$400 share price - $330 strike price - $31.85 net debit * 4,991 contracts * 100], $65 higher per contract than today's data. Not much has changed.
Another possible options strategy is a bearish Risk Reversal.
This involves buying an OTM (out-of-the-money) put and selling an OTM call for premium. It profits from a downward move in the share price.
So, in the case of the March 19/2027 $220 put and $330 call, the institution would buy the $220 put for $15.00 and sell the $330 call for $16.50, for a net credit of $1.50.
Let’s assume the share price falls to $200 by expiration. The institution’s profit would be $2,150 per contract, or $10.7 million [$220 strike price - $200 share price + $1.50 net credit * 4,991 contracts * 100].
That’s the good news. The bad news is that losses are unlimited. If the share goes to $400, the loss would be $34.2 million [$400 share price - $330 strike price - $1.50 net credit * 4,991 contracts * 100].
Given the trade price for the call was $16.85, closer to the $17.20 ask price than the $16.00 bid price, the options strategy in play would more likely than not be a long strangle.
Bottom Line: Expedia’s unusual options activity from yesterday was neither bullish nor bearish.
On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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