CTRP’s Mixed Bag
Sell Puts, Hold Calls
PLAY: Sell your CTRP February 30 Puts (O:CTRP 10N30.00) at market, good for the day. Hold your CTRP February 32.50 Calls (O:CTRP 10B32.50).
Dear Bottarelli Research Member,
Good morning. Earnings from Chinese online travel leader Ctrip International (CTRP – NASDAQ) offered investors a mixed bag, which explains the inconsistent and choppy trading thus far today.
Their Q4 earnings came in at $0.19 per share, which missed the analyst estimate of $0.20 by a mere penny. But at the same time, CTRP also reported that their sales rose 43% to $83 million, which beat the estimate of $80.4 million. They also reported that they expect 30% revenue growth in the current quarter. So as I review this report, it looks like CTRP had one disappointment (missing Q4 earnings by one cent) and two positives (beating on their sales and reaffirming 30% revenue growth).
As it stands, CTRP gapped lower at the open but has since recovered most of the losses (and even turned green for a few seconds). This choppy trading has not been the move we wanted to see. As a result, the CTRP February 32.50 Calls (O:CTRP 10B32.50) and the CTRP February 30 Puts (O:CTRP 10N30.00) that we entered for a total price of $3.04 now trade for a total price of $2.30. But while we’re down, we’re certainly not out. Given the fact that CTRP’s initial gap was bought, I think the trend is still biased to the upside. Given this situation, let’s dump out puts and let CTRP’s recovery push our calls into profitability.
PLAY: Sell your CTRP February 30 Puts (O:CTRP 10N30.00) at market, good for the day. Hold your CTRP February 32.50 Calls (O:CTRP 10B32.50).
At the same time, we’re finally getting an upward push in Mosaic (MOS – NYSE). The up-move was triggered by German salt miner K+S, who said this morning that a January price cut for their potash products has triggered strong demand from fertilizer wholesalers. This offers investors a clear indication that the market for potash is indeed recovering. Therefore, continue to hold your MOS February 60 Calls (O:MOS 10B60.00).
Also recovering nicely is Intercontinental Exchange (ICE – NYSE). The ICE February 105 Calls (O:ICE 10B105.00) that we’re holding for $2.25 have just ticked up to a high of $2.15, so it looks like our patience could pay off. If we get one more up-tick, we’ll be in the black. Hold.
As always, I’ll be out with further updates as the day progresses. Until then…
Lock and load!
Sincerely,
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