By Gunjan Banerji 

Options traders are bracing for a relatively calm earnings season for online travel stocks, despite big swings in shares of individual companies this reporting season.

Projected swings for companies like Expedia Group Inc., TripAdvisor Inc. and Booking Holdings Inc. are hovering below the average moves recorded in previous eight earnings releases, Goldman Sachs Group Inc. analysts wrote in a Wednesday note.

For example, traders are betting on a roughly 4.9% swing up or down for Booking stock, compared with the historical 7.1% move in either direction. All three companies are due to report in early November.

"We believe options prices on stocks in the online travel sector are low ahead of earnings," the Goldman Sachs analysts wrote.

Options investors tend to project bigger moves in single stocks than they end up recording, but the opposite is the case with these online travel stocks. The lower-than-normal projections are striking because this earnings season has been marked by some big swings.

The average S&P 500 stock has moved up or down about 3.9% following its earnings report this quarter, a bigger move than in each of the past two quarters, the Goldman analysts wrote.

Correlations among stocks have also fallen lately as swings in shares of individual companies have outpaced the broader markets, according to Credit Suisse Group AG. The firm's analysts said this week that they expect correlations to continue to drop.

"Relief rallies have dominated earnings this quarter," wrote the Goldman analysts. Though earnings are poised to decline for this quarter, they haven't been as bad as many thought they would be after months of fears about a recession on the horizon.

That has made a strategy in which investors buy bullish options that would pay out if stocks continue to lurch higher more profitable than it had been in prior quarters, the analysts wrote.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

 

(END) Dow Jones Newswires

October 30, 2019 13:51 ET (17:51 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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