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Delta Air Lines, Inc. (DAL) Trader Sees New Highs Ahead

One Delta Air Lines, Inc. speculator rolled her bullish bet up and out

by 5/29/2014 2:24 PM
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Delta Air Lines, Inc. (NYSE:DAL) has been a technical outperformer for some time, with the shares up more than 120% year-over-year. In fact, the stock hit a record peak of $40.69 in yesterday's session, and, although DAL was last seen consolidating a portion of these gains -- lingering near $39.94 -- one of today's options bulls is standing by her proverbial man.

Roughly 45,000 calls are on the tape thus far, and around two-thirds of this activity has centered on two specific strikes. Shortly after the open, one block of 15,000 June 30 calls went off closer to the bid price for $10.30 apiece, implying they were sold. At the same time, a symmetrical block of January 2015 45-strike calls changed hands near the ask price for $2.35 apiece, indicating they were purchased.

Trade-Alert suggests the activity at the lower-strike call closed a position originally initiated in November when DAL was trading south of $30, while the action at the higher-strike option was of the opening kind. In summation, it appears this DAL speculator rolled her bullish position up a number of strikes, while giving the stock an additional seven months for her new forecast to play out.

From a longer-term perspective, it's been puts that option traders have been accumulating at a faster-than-usual clip in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.48 ranks in the 96th percentile of its annual range. Simply stated, puts have been bought to open over calls with more rapidity just rapidity just 4% of the time within the past year.

Given Delta Air Lines, Inc.'s (NYSE:DAL) longer-term uptrend, however, a portion of this activity may be at the hands of shareholders protecting against any unexpected downside. With the stock's Relative Strength Index (RSI) of 71 sitting solidly in overbought territory, today's pullback may have been in the cards.

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4% of the time within the past year.


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