Options Alert: Calls Surge After Chinese Travel Stock Reverses Off Lows
David Russell
October 24, 2023
Chinese stocks have struggled lately as tension grows between Washington and Beijing. However, at least one trader seems bullish on travel stock Trip.com.
Heavy volume was detected in the November 38 calls, with more than 24,000 contracts changing hands for $0.15. Volume was 271 times open interest at the strike, which suggests new money was put to work.
Calls fix the price where investors can purchase a security. They can appreciate if the shares rally, but also expire worthless if they don’t move enough.
TCOM ended the session up 5.84 percent at $33.81. The price action was potentially noteworthy because the stock briefly hit a four-month low, but reversed to close at the highest level in over a week. The resulting “outside day” is a potentially bullish reversal pattern, which could make some traders expect further gains.
If Monday’s calls were purchased, they could generate significant leverage if TCOM surges back toward its recent highs. They could double in value every $0.15 that the stock climbs above $38.15. A return to the August 10 peak of $43.59 would translate into a potential profit of about 3,500 percent. They’ll be worth nothing below $38.
The Shanghai-based company saw revenue increase by 180 percent last quarter as travel recovered after coronavirus lockdowns. Some investors may also think it will benefit from as China stimulates its economy to offset a housing slowdown.
Overall option volume was 10 times greater than the average in the last month, according to TradeStation data. Calls outnumbered puts by a bullish 32-to-1 ratio.
Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See Characteristics and Risks of Standardized Options. Visit www.TradeStation.com/Pricing for full details on the costs and fees associated with options.
David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial.
Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.
Synchrony Financial jumped on strong earnings last month, and options traders seem to think the move will continue. Call volume in the consumer-lending company spiked to a four-year high yesterday, according to TradeStation data. Two contracts were especially active...
Bitcoin is flirting with record highs and the options are getting active in Coinbase before its quarterly results. Check out this large transaction yesterday in the cryptocurrency exchange: Some 35,215 December 190 calls traded for an average price of $44.87. Matching...
JD.com jumped recently, and some traders may see potential for further upside. The first pattern on today’s chart is the dramatic rally between September 20 and October 7. The Chinese e-commerce company has shown signs of stabilizing above a 50 percent retracement of...
Explore the Crossroads Summit
You are leaving TradeStation.com for CrossroadsSummit.com, an exciting new conference that highlights opportunity at the intersection of chaos and innovation. Click the button below to acknowledge that you understand that you are leaving TradeStation.com.
You are leaving TradeStation.com for another company’s website. Click the button below to acknowledge that you understand that you are leaving TradeStation.com.
This event is hosted on YouCanTrade. The information for this event is being provided for informational and educational purposes only.
You are leaving TradeStation Securities and going to YouCanTrade. YouCanTrade is an online media publication service which provides investment educational content, ideas and demonstrations, and does not provide investment or trading advice, research or recommendations. YouCanTrade is not a licensed financial services company or investment adviser and does not offer brokerage services of any kind.
TradeStation Securities, Inc. provides support and training channels hosted on YouCanTrade, its affiliate. Other than these support and training channels, any services offered by YouCanTrade are not sponsored, endorsed, sold or promoted by TradeStation Securities and it makes no representation regarding any YouCanTrade goods or services.
To acknowledge you are leaving TradeStation Securities to go to YouCanTrade, please click