Profit Warnings Wallop Ryanair Holdings plc (RYAAY)

Ryanair Holdings plc (ADR) (RYAAY) is one of several travel stocks tumbling after last week's "Brexit" vote

by Alex Eppstein

Published on Jun 27, 2016 at 10:28 AM
Updated on Jun 24, 2020 at 10:16 AM

Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) shares are taking a nosedive, amid warnings that last week's "Brexit" vote will weigh on the profits of airlines. Also, the travel stock received a downgrade to "hold" from "buy" at Evercore ISI, as well as price-target cuts at Citigroup and Credit Suisse. At last check, RYAAY is down 14% at $66.72, and fresh off an annual low of $66.09 -- to the delight of bearish options traders.

During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 1.70 put options for every call -- albeit on relatively low trading volume. That trend is accelerating today, with puts crossing at nine times the usual intraday rate, and buy-to-open activity detected at the August 65 put. In other words, these put buyers foresee even lower lows for RYAAY through back-month expiration, at the close on Friday, Aug. 19.

Options traders aren't the only ones who have struck a bearish pose on the travel stock. Short interest exploded 69% during the most recent reporting period -- though, overall, less than 0.2% of RYAAY's float is shorted. Given this morning's downside gap, it's no surprise to see the airline stock on the short-sale restricted list. This may explain why put volume has picked up, as bears are seeking out alternative avenues to place pessimistic bets on the shares.

Technically, Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) has had a dismal past few weeks. As recently as June 3, the travel stock was trading at a record high of $89.67. Since then, however, the shares have tumbled nearly 26%.

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