Airline Stock Dips After Convertible Debt Deal Announcement

JBLU options can be had at a bargain, too

Assistant Editor
Mar 22, 2021 at 9:28 AM
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The shares of JetBlue Airways Corporation (NASDAQ:JBLU) are suffering in pre-market trading, after the company announced a massive convertible debt deal. Specifically, JetBlue is planning to raise $650 million by selling convertible senior notes, which will mature on April 1, 2026. In response, JBLU is down 3.6% to trade at $20.25 in ahead of the opening bell.

On the charts, JetBlue stock is just five sessions removed from a three-year peak of $21.73, which also sits just above the equity's 2020 highs. Should today's negative price action continue, the 20-day moving average could act as a net to save the security from further losses. Longer term, JBLU is up 176.3% year-over-year. 

In the options pits, calls rule the roost, according to the stock's 50-day call/put volume ratio. In fact, in the past ten weeks, 9.16 calls were picked up for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all other readings from the past year, suggesting long calls have rarely been more popular. 

Plus, now seems like a good time to weigh in on JBLU's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 48% sits in the extremely low 2nd percentile of its annual range. This suggests the equity sports attractively priced premiums at the moment.

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