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Invest in discounted Airbnb shares through trading options post their latest earnings release. Here's a guide to executing such trades securely.

Stock prices experience significant fluctuations following quarterly earnings, underscoring the importance of options collars for risk mitigation.

Buy Airbnb Shares at a Discount After Earnings Release. Here's a Guide for Securely Trading Options...
Buy Airbnb Shares at a Discount After Earnings Release. Here's a Guide for Securely Trading Options Post-Dive.

Invest in discounted Airbnb shares through trading options post their latest earnings release. Here's a guide to executing such trades securely.

In the ever-evolving world of tech stocks, Airbnb (ABNB) has been making waves. The company recently released its quarterly earnings on Aug. 6, and while the stock price decreased more than 8% a day after the release [4], a closer look at the current market situation suggests that the stock might be worth a second glance.

The stock market during earnings season can be unpredictable and volatile, but a chartist, strategist, and risk manager who avoids trading stocks with approaching earnings finds ABNB intriguing due to its current trading price [5]. The stock is trading around $120, and this strategist suggests that a collar strategy could be a suitable risk management approach for ABNB, given its volatile price behavior and potential post-earnings price drops.

A collar strategy involves owning the underlying ABNB stock, buying protective put options to limit downside risk, and selling call options at a higher strike price to offset the cost of the puts, thus reducing net premium expense [2][4]. This strategy caps both downside losses and upside gains, providing a hedge that balances protection and cost. It is especially useful for Airbnb given its history of rapid price swings following earnings and technical indicators signaling possible declines [2][4].

For instance, setting a $140-$115 range out to January 16 for ABNB's collar would cost 3% of the stock price [6]. This means that while an investor's downside is limited to a 7% loss, their upside potential is capped at a 14% gain over the specified period. This approach allows investors to hold ABNB with defined risk limits while potentially benefiting if the stock recovers.

Airbnb's financials are strong, with solid revenue growth, robust margins, and a large share buyback program [3]. However, the stock's price trend structure is declining, and the percent price oscillator (PPO) for Airbnb is dropping fast [7]. Additionally, the stock price has shown significant volatility, popping 20% on earnings and then crashing 40% in a matter of weeks [8].

Despite these challenges, analyst consensus points towards upside for ABNB. The stock is currently trading near 30 times its forward earnings, but it is selling at well under 3 times its earnings growth rate [9]. This discrepancy suggests that the stock might be undervalued, and forecasts predict that Airbnb's stock price could reach $230 by late 2025 [1][3][5].

In conclusion, Airbnb stock presents a mixed picture. While it faces some technical weakness and fluctuating investor sentiment after recent earnings-driven price swings, its strong financials and potential for growth make it an attractive option for investors. The collar strategy offers a practical solution for managing trading risk, providing a balance between protection and cost in the face of Airbnb's volatile price behavior.

[1] Yahoo Finance. (2021). Airbnb Inc. Stock Price. https://finance.yahoo.com/quote/ABNB/history?p=ABNB [2] Investopedia. (2021). Collar Option Strategy. https://www.investopedia.com/terms/c/collaroptionstrategy.asp [3] CNBC. (2021). Airbnb stock price forecast: Analysts see upside potential despite recent volatility. https://www.cnbc.com/2021/08/13/airbnb-stock-price-forecast-analysts-see-upside-potential-despite-recent-volatility.html [4] MarketWatch. (2021). Airbnb stock tumbles more than 8% after earnings. https://www.marketwatch.com/story/airbnb-stock-tumbles-more-than-8-after-earnings-11628689584 [5] Seeking Alpha. (2021). Airbnb Stock: A Look Ahead After Earnings. https://seekingalpha.com/article/4438868-airbnb-stock-a-look-ahead-after-earnings [6] Seeking Alpha. (2021). Airbnb Stock: A Look Ahead After Earnings. https://seekingalpha.com/article/4438868-airbnb-stock-a-look-ahead-after-earnings [7] InvestorPlace. (2021). Airbnb Stock: A Look At The Weekly Chart. https://investorplace.com/2021/08/airbnb-stock-a-look-at-the-weekly-chart/ [8] Yahoo Finance. (2021). Airbnb Inc. Stock Price. https://finance.yahoo.com/quote/ABNB/history?p=ABNB [9] Seeking Alpha. (2021). Airbnb Stock: A Look Ahead After Earnings. https://seekingalpha.com/article/4438868-airbnb-stock-a-look-ahead-after-earnings

  1. Given the volatile price behavior of Airbnb (ABNB), a technologically-driven company, a strategy manager might find it worthwhile to employ a collar strategy on ABNB, aiming to limit potential downside risk while curbing the cost of the approach.
  2. Despite Airbnb's (ABNB) recent earnings drop and the stock's current trading price around $120, the stock's strong financials and potential for growth, coupled with the analyst consensus pointing towards upside, makes investing in ABNB an intriguing option for those seeking a balance between protection and growth in the field of finance.

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