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Shares of Allegiant Travel Company (ALGT - 60.67) rallied on Wednesday, after the airliner received an upgrade to "outperform" from "market perform" at Raymond James. However, bearish speculators blatantly disregarded the news, as nearly 2,000 puts changed hands, which was a whopping 35 times above the norm. The bulk of the action centered around the out-of-the-money May 55 strike, where 1,870 of these puts were traded -- almost all of them at the ask price, pointing to buyer-driven activity. This strike saw a significant overnight rise in open interest, bringing the total number of outstanding contracts to 1,502 -- indicating that most of the volume was comprised of new positions. In order for traders to collect a profit from these bought-to-open puts, the stock must retreat beneath the $55 mark by May expiration.
This bearish skew toward ALGT is par for the course. The Schaeffer's put/call open interest ratio (SOIR) sits at 3.16, confirming that puts more than triple calls among options slated to expire in three months. This ratio registers in the 73rd percentile of its annual range, which means that near-term options players have been more put-heavy toward the stock just 27% of the time over the last 12 months.
From a technical perspective, ALGT boasts a year-over-year gain of nearly 40%, and has outperformed the broader S&P 500 Index (SPX) by roughly 14% during the past 20 sessions. The stock is currently trading far above its 10-day moving average, which has acted as support for more than a month. In fact, the equity reached a new record high of $61.21 earlier this morning.
At last check, ALGT is up about 0.6% to wink at $60.67.