Analyst Sees New Highs on the Horizon For Airline Stock

UBS glowed about United's cost management profile

Managing Editor
Nov 13, 2019 at 9:55 AM
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The shares of United Continental Holdings Inc (NASDAQ:UAL) are trading at $92.71 this morning, after UBS initiated coverage on the airliner with a "buy" rating and $110 price target. The analyst in coverage glowed about the company's cost management profile in comparison to sector peers

UAL is now trading within a chip-shot of its Dec. 3 record high of $97.85. It's been a turbulent 2019 for the airline stock, with the $81 level emerging as a solid floor in the last three months. Since its last test of that region in early October, the security has tacked on 14%. 

Recent options traders have made calls quite popular lately. Specifically, the 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.89 and ranks in the 86th annual percentile.

In the wake of UAL's earnings report last month, implied volatility levels have imploded, making near-term options attractively priced at the moment. The stock's Schaeffer's Volatility Index (SVI) of 22% sits in just the 7th percentile of its annual range, meaning now is an opportune time to speculate on the equity's short-term trajectory with options.

What's more, UAL had been an attractive target for premium buyers over the last 12 months. This was per its elevated Schaeffer's Volatility Scorecard (SVS) reading of 88 (out of 100).


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