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Delta Stock Static After Announcing Pilot Furloughs

The equity is down 47% year-over-year, however

Digital Content Manager
Aug 25, 2020 at 9:59 AM
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The shares of Delta Air Lines, Inc. (NYSE: DAL) are  up 0.2% at $29.87 this morning, after the airliner announced it will furlough 1,941 pilots in October, noting the company is overstaffed and air travel demand remains repressed due to the lingering pandemic. The company had warned it would need to furlough employees once the $25 billion in U.S. government stimulus runs out, but pilot union Air Line Pilots Association, International (ALPA) said they were disappointed in Delta's decision, and that management had decided to use "threat of furloughs to force acceptance of involuntary concessions." 

On the charts, Delta stock has been trading sideways for most of the past three months. Earlier in June, however, shares attempted a rally to the $38 mark, but the breakout was capped by the 100-day moving average. Now, shares are struggling to break through the $30 level, which is still substantially lower than this year's pre-pandemic high of $62.48 on January 17. Longer term, Delta  Air Lines stock is down roughly 47% year-over-year.

Nonetheless, analysts remain mostly optimistic towards the security, with seven of the 11 in coverage sporting a "buy" or better rating, and the remaining four carrying a tepid "hold." Meanwhile, the consensus 12-month price target of $35.47 is a hefty 19% premium to current levels.

That upbeat analyst sentiment is reflected in the options pits, where calls are popular. The stock sports a 10-day call/put volume ratio of 4.38 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 94th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

What's more, DAL's Schaeffer's put/call open interest ratio (SOIR) of 0.61 now stands higher than just 7% of readings from the past year, implying short-term options traders have been more call-biased than usual. 

 

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