Considering Our Options – $CTRP’in

by CC March 18, 2015 2:50 pm • Commentary

Chinese travel site CTRP reports earnings after the bell tomorrow. We have a bearish trade on in the name that we initiated back on March 4th :

Trade: CTRP ($45.99) Bought March 45 puts for 1.95

Break-even on March Expiration:

Profits: below $43.05, down 6%

Losses: up to 1.95 between 43.05 and 45, max loss of 1.95 above $45

The stock is slightly higher than where we bought the puts as the stock is up more than 3 dollars in just the past few days. It is now at a very significant level as the stock is right at its 50 day moving average:

Screen Shot 2015-03-18 at 12.28.03 PM
1 yr CTRP from LiveVol Pro

Because of that rally in the past few days we’re no in the somewhat awkward spot of having not spread the trade in any way before the event. That could change tomorrow if the stock was to have a bad day into the event but for now we’ll just watch and see. A break higher above the 50 day and the stock could have some room to run. A failure here on bad earnings and the stock could easily see $40 or lower. The puts are currently about 1.50ish (we paid 1.95) and are about 36 deltas. So a move back below 45.50 tomorrow would get us to about even and maybe at that point we rethink the trade, possibly spread it, etc.

We’ll check back in tomorrow before the event.