3 Airline Stocks Dropping After Brussels Bombings

Delta Air Lines, Inc. (NYSE:DAL), United Continental Holdings Inc (NYSE:UAL), and Southwest Airlines Co (NYSE:LUV) are among the airline stocks sinking in the wake of the Brussels attacks

by Alex Eppstein

Published on Mar 22, 2016 at 10:26 AM
Updated on Mar 22, 2016 at 10:26 AM

The deadly bombings in Brussels are battering airline stocks this morning. Among the stocks trading lower are Delta Air Lines, Inc. (NYSE:DAL), United Continental Holdings Inc (NYSE:UAL), and Southwest Airlines Co (NYSE:LUV). Below, we'll take a closer look at DAL, UAL, and LUV, and how options traders have positioned themselves on each.

DAL has dropped 1.9% at $49.18, as the company joins its sector peers in scrambling to reroute flights headed for Brussels. Today's step back marks a change of pace for a stock that's been bounding higher since its early March bear gap -- though it may have found a foothold at its 20-day moving average, located at $48.38.

Option traders have high hopes for DAL, buying to open 4.59 calls for every put during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The corresponding call/put volume ratio ranks in the 65th annual percentile, as well. Analysts have also taken a very bullish approach toward the shares, with 100% rating Delta Air Lines, Inc. a "buy" or better.

Another airline stock hitting turbulence is UAL, off 1.4% at $60.35. As such, the shares are on track to end their four-day winning streak, after finally taking out the $60 level in recent sessions. In the options arena, short-term traders have preferred calls to puts. United Continental Holdings Inc's Schaeffer's put/call open interest ratio (SOIR) stands at 0.48, with calls more than doubling puts among options with a shelf-life of three months or less. Elsewhere, 90% of covering analysts have handed out a "buy" or better assessment, with not a single "sell" opinion in sight.

Last up is LUV, which has slipped 0.9% to trade at $44.60. Longer term, though, the stock has been on fire -- rallying 31.3% since its near-term low of $33.96 on Feb. 8. If options traders have their druthers, Southwest Airlines Co will run into additional headwinds. During the past 10 weeks, the stock has amassed an ISE/CBOE/PHLX put/call volume ratio of 1.58 -- just 9 percentage points from an annual peak. In other words, traders have bought to open LUV puts over calls at a near-extreme rate in recent months.

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