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Options Action Recap: Priceline Too Pricey, and Should You Short Citi?

Two bearish trades on two wildly different companies. That more or less sums up last Friday’s ‘Options Action’, where the market’s recent rally took a back seat to some decidedly downbeat views on our show.

First up was Priceline.com . Shares of the company have had a massive move on the back of Expedia results. But according to Oppenheimer’s Carter Worth, that run appears a little long in the tooth, and he suggested a short-term pull back to about $700 a share. Piggybacking on Worth’s dour view, CRT Capital’s Mike Khouwsuggested buying the June 750/700 put spread for $18.00. His trade and payout are below.

MIKE’S PRICELINE TRADE

  • BUY JUNE 750-STRIKE PUT FOR $38.00
  • SELL JUNE 700-STRIKE PUT FOR $20.00

HOW MIKE’S PRICELINE TRADE MAKES MONEY

  • LOSSES ABOVE $732
  • PROFITS BETWEEN $732 - $700
  • PROFITS CAPPED AT $700

Our other bearish trade centered on the financials and the belief that the lousy performance of the banks is sounding an alarm. If investors can’t wait to speculate on stocks like Expedia and Priceline.com, then why are they shunning the financials, which typically do well during so-called “risk on” rallies? Dan Nathan of Riskreversal.comused the same structure to express his dim view on Citigroup , buying the July 32/27 put spread for an even buck. Trade and breakdown are below.

DAN’S CITIGROUP TRADE

  • BUY JULY 32-STRIKE PUT FOR $1.55
  • SELL JULY 27-STRIKE PUT FOR $0.55

HOW DAN'S TRADE MAKES MONEY

  • LOSSES ABOVE $31
  • PROFITS BETWEEN $31 - $27
  • PROFITS CAPPED AT $27

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