On August 11th, 2017 TripAdvisor, Inc. (TIKER: TRIP.NASDAQ) $42.00 Call had one of the highest implied volatility in the options market, Zacks Equity Research announced.
Investors need to be extremely cautious with the stock based on moves in the options market, experts say.
Implied volatility demonstrates the level of movement the market is expecting with TripAdvisor in the upcoming future and it shows there can be some event that may cause a big rally or a huge sell off.
Zacks Equity Research is currently putting TripAdvisor on hold in its review — Zacks Industry Rank. They also note that over the period of two month no analysts have increased their earnings estimates for the current quarter, while one analyst has revised the estimate downward.
Taking into consideration the attitude of many analysts towards TripAdvisor at this time the experts believe there’s a trade developing.
It is not uncommon that options traders particularly look for options with higher levels of implied volatility to sell premium.
Many seasoned traders use this strategy because it captures decay.