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A pessimistic options trade on a travel stock facing resistance

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In a recent article, the author discusses the recent performance of Expedia Group (EXPE) stock following their earnings conference call and provides insights into a bearish options trade opportunity. Despite a drop of more than 8% after weak forward guidance, the stock has managed to recover most of its losses in just a month. However, the stock is currently facing resistance at the $128 price level, suggesting a potential downward trend. To support this bearish outlook, the author analyzes three technical indicators on the stock chart. The Relative Strength Index (RSI) has flattened out, indicating a loss of upward momentum, while the Directional Movement Index (DMI) and Average Directional Index (ADX) also suggest a lack of strength in the current rally.

The author proposes a bear put spread as a trade structure to capitalize on the potential downward movement in EXPE stock. A bear put spread involves buying a put option at a specific strike price and selling a put option at a lower strike price. This strategy allows traders to profit if the stock price falls below the lower strike price by expiration date. In this case, the author buys a $124 put and sells a $123 put with a July 5th expiry date. The cost of the trade is $50, with the potential to double the investment if EXPE is trading at $123 or below on the expiration date. The author also mentions that if EXPE continues to rise towards the $128 resistance level, a higher strike bear put spread could be a better trading opportunity.

It is important to note that the content provided is for informational purposes only and should not be considered as financial, investment, tax, or legal advice. Each individual’s circumstances are unique, and it is recommended to seek advice from a financial or investment advisor before making any decisions. The author also discloses that the content is general in nature and may not be suitable for everyone’s circumstances. The full disclaimer can be found on the author’s website, where further details about the trade setup and alternate trading opportunities are also available. Overall, the article provides a thorough analysis of the current situation with EXPE stock and offers a potential trading strategy for traders looking to capitalize on the expected downward trend.

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