Day-Trade Priceline Earnings
- Posted by Michael Bigger
- on August 8th, 2012
Tuesday in the after hour market, Priceline ($PCLN) reported earnings and gapped down 13%. Expedia ($EXPE) followed and went down 4% on the news. I quickly went to our Spread Analyzer to run a 2 year query on $PCLN versus $EXPE (see the results below). I noticed that the Pearson correlation of 20.83% was very low for the pair and that there was a good chance for $EXPE to bounce back some. I bought $EXPE for 56.5 and quickly flipped it for a $.50 per share profit. I was able to use the Spread Analyzer’s stats to exploit the relationship between the two stocks. In this case I did not catch the falling knife, but used a non-correlated competitor to take advantage of the news.
There are all kind of ways to use stats and pairs trades to make money. Anything you want to add?
Tuesday:
Wednesday:
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Michael Bigger is an investor and a trader who has been involved with trading technologies for more than twenty years. In 1992, Michael joined Citibank as head trader of U.S. single-stock derivatives, where he managed a $5 billion portfolio of equity derivatives. In 1998, he joined D.E. Shaw & Co., L.P. to trade the U.S. equity derivatives portfolio. (More) -
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