Options Corner: EXPE Upgrade After Shares Slide 25%

Core Viewpoint - Expedia's stock has been upgraded to "buy" from "hold" by Jeffre, with a new price target set at 300, up from 240, due to the evolving internet landscape benefiting from AI advancements [1][2]. Group 1: Stock Performance - Expedia's stock has seen a significant increase of over 160% over the last three years, rising from approximately $89 per share to above $303 at the beginning of January [3]. - The stock has experienced a pullback of about 25% from its all-time highs [4]. - Current trading is expected to open around $230 per share, with potential support at this level and resistance at the 50-day moving average around $237 [5][6]. Group 2: Market Trends and Analysis - The travel sector, including Expedia, has shown solid gains as travel demand has picked up, with improving margins and stabilized growth [4]. - Despite the positive trends, Expedia is still underperforming compared to its competitor Booking.com [4]. - The stock's Relative Strength Index (RSI) is at 44, indicating it is in the middle of the momentum range [7]. Group 3: Options Strategy - A proposed options strategy involves selling an out-of-the-money 245 call option while buying a 255 call, creating a neutral to bearish position with a potential profit of $300 per spread and a risk of $700 [11]. - This strategy allows for a break-even point at $248, which is over 7% above the current share price, providing a cushion for potential upward movement [12]. - The probability of the short 245 strike finishing out of the money at expiration is approximately 72%, allowing for profit even if the stock consolidates between the two moving averages [12][13].