Skepticism Sets In on Delta Air Lines, Inc. (DAL) Ahead of Earnings

Delta Air Lines, Inc. (DAL) will report earnings ahead of the bell next Tuesday

Jan 16, 2015 at 11:00 AM
facebook X logo linkedin

Put players have been active on Delta Air Lines, Inc. (NYSE:DAL), as the company prepares to tell all in the earnings confessional ahead of next Tuesday's open. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 10-day put/call volume ratio of 0.53 ranks in the bearishly skewed 64th percentile of its annual range.

Even more telling of this put-skewed trend is DAL's Schaeffer's put/call open interest ratio (SOIR) of 0.75, which ranks higher than all other readings taken in the past year. Simply stated, short-term speculators are more put-heavy now than at any other point over the last 12 months.

In the February series of options, peak put open interest is found at the 45 strike, where 3,912 contracts reside. According to data from the ISE, CBOE, and PHLX, the majority of the contracts initiated here in recent months have been of the buy-to-open variety. In other words, traders expect DAL to settle south of $45 at the close on Friday, Feb. 20 -- when the options expire -- perhaps sparked by a post-earnings plunge.

Historically speaking, DAL has tended to make upside moves in the wake of its earnings report. Over the past eight quarters, specifically, DAL has averaged a single-session post-earnings gain of 4.3%. This time around, the options market is projecting in a bigger move of 5.9%, and considering the weekly 1/23 45-strike call is pricing in higher implied volatility (IV) than the weekly 1/23 45-strike put (52.2% vs. 53.3%), it appears the action is expected to resolve to the downside.

Meanwhile, those currently purchasing pre-earnings bets on DAL are willing to pay a pretty penny. The stock's 30-day at-the-money IV of 43.1% ranks in the 94th percentile of its annual range, meaning short-term options are more expensive than usual.

On the charts, Delta Air Lines, Inc. (NYSE:DAL) has been a long-term standount, and is up 45% year-over-year to trade at $45.00. This morning, however, the stock has edged 0.1% lower, despite a price-target hike to $60 from $58 at Barclays -- territory yet to be charted -- which also underscored its "overweight" rating.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI