The Play Of The Day
10-06-99 08:10 EST.
Good Morning Stock Fans!
Today's Play of The Day is: Cheap Tickets (NASDAQ:CTIX)
About Cheap Tickets (NASDAQ:CTIX)
Founded in 1986, Cheap Tickets (NASDAQ:CTIX) is one of the leading retail sellers of discount tickets for domestic leisure air travel. Offering more than 400,000 non-published airfares on more than 35 major airlines, Cheap Tickets sells directly to consumers through its Internet site, located at www.cheaptickets.com; through its toll-free number, 1-800-OKCHEAP; and at its 12 retail stores. During the first six months of 1999, Cheap Tickets sold more than 840,000 airline tickets, primarily through its call centers and its Internet site.
Stock Fans! What a surprise it was to see Cheap Tickets (NASDAQ:CTIX) to become unfortunately more like it's name suggest in its share price "Cheap!" For some unknown reason (NASDAQ:CTIX) a stock that over the past few trading sessions had been trading in a sideways range of $30.50 to about $33.00 on moderate volume.
The stock opened yesterday at $32.8750 and on moderate volume went as high as $33.75 in the first 45 mins of trading. However then as it looked to just be pulling back as volume increased slightly it all of the sudden out of nowhere with no kind of warning of bad news or anything that would explain why? Its share was crushed on huge volume of over 2 million shares more then 5 times it 30 day average volume of 413,000 as it would go all the way from its high of $33.75 to $27.00 a place where it had good support as its previous 30 day low was. However it was not done the volume increased even more as shares of (NASDAQ:CTIX) would keep going lower before the finally bounced just $1.00 above their 52 week low of $24.00 a share. Then as the trading day was coming to a close buyers came in as it had little risk of going lower and bought up shares of (NASDAQ:CTIX) which caused it to close the day at $26.8750 only $0.25 below 30 day support.
So the question is what happened? Well, here is my theory. With the recent buyout of Preview Travel (NASDAQ:PTVL) it would now seem to me that (NASDAQ:CTIX) would be in order that if it is to survive in the dot COM word then it now must be bought out. If this is true then why would shares of (NASDAQ:CTIX) without any warning any kind just begin to sell off and not stop until even the shrewdest of investors had sold as they saw it break 30 day support. It seems there is really no answer to explain why, or is there?
With quarterly earnings report for (NASDAQ:CTIX) not do till the end of this month it would seem to me that the logical answer for the hard selloff was in anticipation of a big run to the upside ahead of what I think may be a buyout of (NASDAQ:CTIX). The reason then for the harsh sell off could be in an effort for NASDAQ market makers of the stock to have an opportunity to gather up shares so that when the tide turns on (NASDAQ:CTIX) and it starts to run up on what surly looks to me to be take over rumors upcoming they have shares to sell and make a profit.
In any case even in I am wrong buying up shares of (NASDAQ:CTIX) here has little risk involved with it as it held up and did not break its 52 week level of support. Remember this company is the same one that reported stellar earnings last quarter that caused shares of (NASDAQ:CTIX) to go through the roof up more then $13.00 in one day as it went up and over $60.00 a share.
As I always do when a stock trade option I checked the stock options activity on shares of (NASDAQ:CTIX) for yesterday and low and behold extremely large volume came in on the October 1999 $30.00 and $35.00 Option Calls right after the stock hit bottom at 25.00 and started to go back up.
Taking all this into account and the fact that shares of (NASDAQ:CTIX) has little RISK of going any lower then $25.00 anytime soon. I like shares of (NASDAQ:CTIX) today an awful lot, as I see it as possibly another chance to get in on a stock at the bottom of buy out rumors upcoming. In hopes that we get the same result as (NASDAQ:PTVL) a buyout with a substantial increase in share price.
Buy Area: (Off open oversold in any case. To much reward here to wait on a small pullback)
Sell Stop: $24.75
TARGET: $34.00 -$36.50 (5-15 trading days)
"RUN THE OPTIONS!"
This is the place where the most money can be made with the least amount of risk. The stock options that would be in order here, would be the (NASDAQ:CTIX) October 1999 Option Calls (Symbol:UEY-JG)
If I am right and a buy out is coming on (NASDAQ:CTIX) then much like (NASDAQ:PTVL) Call Options went up 1300% in just 10 trading days. We could see impressive gains in (NASDAQ:CTIX) Call Options ahead of what could be coming.
Have a great day
More to come....