Alaska Air Stock Jumps on RASM Outlook, Bull Note

Nomura Instinet expects DBX stock to fall back to its IPO price

Apr 13, 2018 at 3:07 PM
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It's been a roller-coaster ride on Wall Street today, with the Dow exploring a more than 300-point range on both sides of breakeven, but last seen trading down around 80 points. Among specific stocks making big moves today are regional airline Alaska Air Group, Inc. (NYSE:ALK), cloud firm Dropbox Inc. (NASDAQ:DBX), and skincare specialist Pulse Biosciences Inc (NASDAQ:PLSE). Here's a quick roundup of what's moving shares of ALK, DBX, and PLSE.

Alaska Air Rally Sparks Heavy Options Trading

Alaska Air shares are up 5.7% to trade at $63.71, after the company said it expects first-quarter revenue per average seat mile (RASM) to fall at a slower-than-expected pace. What's more, Evercore ISI resumed coverage on ALK stock with an "outperform" rating, and an $82 price target -- representing expected upside of nearly 29% to the stock's current perch.

More broadly, the equity has been in a channel of lower highs and lows since topping out at an annual high near $96 last July. ALK has been one of the worst stocks to own in April, and bottomed out at a 21-month low of $57.60 earlier this month. The recent rebound off this level is being contained by the security's 60-day moving average. This trendline -- alongside its 120-day counterpart -- has ushered Alaska Air lower for the past nine months.

Today's bull gap has sparked a flood of options activity, with nearly 10,000 contracts traded -- five times what's typically seen at this point in the day. Most active is the April 65 call, where it looks like new positions are being purchased for a volume-weighted average price (VWAP) of $0.63, making breakeven on the bullish trade $65.53 (strike plus VWAP) at expiration.

Dropbox Put Volume Accelerates

Nomura Instinet initiated coverage on Dropbox stock with a "reduce" rating and a $21 price target -- in line with the stock's initial public offering (IPO) price. The shares made their public trading debut on March 23 well above that IPO price at $29, and peaked at $34.83 on March 29. Today, though, DBX stock has dropped 8.6% to trade at $30.49.

Options bears are pouncing, too. More than 9,000 puts have traded on DBX so far today, six times the expected intraday amount. Buy-to-open activity has been detected at the weekly 4/13 31-strike and weekly 5/25 30-strike puts.

Pulse Biosciences Stock Squeezes Shorts

Pulse Biosciences stock is trading 11.2% higher at $20.22, after the medical device maker posted positive data for its Nano-Pulse Stimulation (NPS) treatment study. Today's surge has the shares on track to close north of their 80-week moving average for the first time since late February, though they remain down 14.2% year-to-date.

These longer-term technical troubles have coincided with increased selling pressure from shorts. Short interest is up 20% since mid-November to 2.02 million shares -- the most on record. Today's PLSE rally could be gaining steam as shorts hit the exits, considering the stock's short interest ratio is docked at 9.10 days to cover.

 

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