Southwest Airline Stock Lifted by Upbeat Quarterly Results

The equity sports attractively priced premiums at the moment

Deputy Editor
Apr 22, 2021 at 10:01 AM
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Southwest Airlines Co (NYSE:LUV) took a trip to the earnings confessional this morning, where the airliner reported a small-than-expected first-quarter loss. Digging deeper, Southwest Airlines reported losses of $1.72 per share, well below analysts forecasted losses of $1.85 per share, with revenue that was nearly in line with Wall Street's estimates. In addition, the company said it expects its cash burn rate to lower for the quarter, as pandemic-related conditions improve. At last check, LUV was up 2.4% to trade at $62.04.

With travel demand on the mend amid increased vaccine rollouts, the airline sector is one that's poised for a massive rebound. Feb. 14 saw LUV notch a three-year high of $64.75, nearly 50% above its January lows. Today's positive price action has the equity solidly above the 30-day moving average, a trendline that's caught its fair share of pullbacks over the course of the year. Longer term, LUV has added 106% year-over-year.

Meanwhile, in the options pits, there's been a serious penchant for bearish bets of late. In fact, the stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), stands higher than 82% of readings in its annual range, meaning puts are being scooped up at a quicker-than-usual clip.  

And for those who may be looking to jump aboard LUV with options, now looks to be an affordable time. Southwest Airlines stocks' Schaeffer's Volatility Index (SVI) of 37% sits in the extremely low 9th percentile of all other readings from the past year -- a boon for premium buyers.

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