United Airlines Stock Reverses Course After Earnings

UAL is up 7% in 2021

Deputy Editor
Oct 20, 2021 at 9:19 AM
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The shares of United Airlines Holdings Inc (NASDAQ:UAL) are up 1.9% at $47.10 before the open, after the flight firm posted third-quarter loss of $1.02, compared to the $1.67 loss expected by analysts. The company said that the resurgence in Covid-19 cases has slowed its bookings and accelerated cancelations, which has kept United Airlines from returning to a profit, though UAL's Chief Executive Scott Kirby did note that some of this recent turbulence is "turning to tailwinds." 

The security has been in a downtrend for most of October, after running out of steam at the 140-day moving average. The $46 level seems to have saved UAL from a deeper selloff, keeping it in the black for the year. Year-to-date, UAL is up roughly 7%. 

Analysts have yet to chime in, but the consensus is mixed. Heading into today, five considered UAL a "buy" or better, while eight said "hold" or worse. The 12-month consensus price target of $59.58, meanwhile, is a 26.5%  premium to last night's close. 

Options players have been a bit more bullish. This is per UAL's 10-day call/put volume ratio of 4.44 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 87% of readings from the past year. This implies long calls are being picked up at a much quicker than usual clip. 

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.68 sits in the 24th percentile of its 12-month range. In other words, short-term options players have been more call-biased than usual. 

Despite its earnings event, UAL options are affordable right now. The equity's Schaeffer's Volatility Index (SVI) of 42% stands higher than just 12% of all other annual readings, meaning options traders have been pricing in relatively low volatility expectations at the moment. 

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