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Option Brief: JetBlue Airways Corporation (NASDAQ:JBLU) hit a multi-year high of $7.57 earlier today, but was last seen a nickel lower at $7.52. The earlier achievement has JBLU options changing hands at a faster-than-usual pace, particularly on the call side, where the 7,279 contracts traded triples the typical intraday volume.
Most active so far has been the out-of-the-money November 8 call, which has seen about 5,200 contracts cross the tape. The majority of the volume transpired as a 4,000-lot that traded at the ask price of $0.15. Open interest at the strike is home to just 332 contracts, and implied volatility is on the rise, signaling buy-to-open action.
In order for today's big trader to profit, he needs JBLU shares to advance past $4.15 (strike price plus premium paid) by front-month options expiration. If instead the underlying is sitting beneath the strike at the closing bell on Nov. 15, the speculator will part with his initial premium paid. However, given the airline's high levels of short interest -- roughly 20% of its outstanding float is sold short -- this may be a desirable outcome. In other words, it's possible the out-of-the-money call buyer is actually seeking upside protection for his short stock position.
Ahead of expiration, the airline's third-quarter earnings report is due out the morning of Tuesday, Oct. 29. The Street is calling for per-share earnings of 22 cents, an 8-cent advance from a year ago. Also next week, JetBlue Airways Corporation (NASDAQ:JBLU) will be celebrating the fifth anniversary of its John F. Kennedy International Airport home by hosting a Greenmarket in Terminal 5. The event, running from Oct. 29 through Oct. 31, will feature foods and other products made in upstate New York.