Bulls Hit the Exits as Spirit Airlines Incorporated (SAVE) Dives to Lows

Spirit Airlines Incorporated (SAVE) fell to an annual low on a revenue warning

Oct 16, 2015 at 10:50 AM
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Spirit Airlines Incorporated (NASDAQ:SAVE) is running into some serious turbulence, after the transportation firm warned of a severe fourth-quarter drop in unit revenue. At last check, the stock has plummeted 14% to $43.05 -- after earlier hitting an annual low of $42.77 -- and now sits on the short-sale restricted list. On the sentiment front, this morning's severe dive is weighing on analysts and option traders alike.

The brokerage bunch has been extremely upbeat toward SAVE. Ninety percent of analysts have handed out "strong buy" ratings on the stock, with not a single "sell" recommendation in sight. What's more, the consensus 12-month price target of $72.64 hovers in territory not charted since late April. Not surprisingly, a pair of firms has already hit the proverbial "eject" button, with Raymond James and Morgan Stanley lowering their respective opinions to the equivalent of a "hold," and the latter also slashing its price target to $53 from $66. Should SAVE extend its swoon, additional bearish notes could come down the pike.

Option traders may be feeling the heat, as well, considering how bullish they've been in recent weeks. Specifically, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SAVE has seen nearly four calls bought to open for every put during the last 10 sessions. The corresponding call/put volume ratio of 3.83 ranks above 77% of comparable readings from the prior year. An unwinding of this optimism could lend itself to future headwinds.

In today's trading, put volume is taking off, at nine times the intraday average. Most active is Spirit Airlines Incorporated's (NASDAQ:SAVE) now in-the-money November 45 strike, where new positions are being initiated.

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