Options Bulls Blast Soaring Airline Stock After Merger News

Call volume on SAVE is running at 11 times the intraday average

Deputy Editor
Feb 7, 2022 at 10:09 AM
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The shares of Spirit Airlines Incorporated (NYSE:SAVE) are surging this morning, last seen up 15.9% to trade at $25.18, following news that the low-cost carrier is set to purchase competitor Frontier Airlines, which is owned by Frontier Group (ULCC). The deal, valued at $6.6 billion, will result in the companies merging to create the fifth-largest airline in the country. In other news, Spirit Airlines reported fourth-quarter losses and revenue that beat Wall Street's estimates.

Spirit Airlines stock is heading for its first close above $25 since November. This is especially impressive considering SAVE is coming off of a Jan. 28 dip to $19.40, which is the security's lowest level of trading since late 2020. The shares once again have support from the 160-day moving average, as they move back into positive territory for 2022.

Call traders are head over heels following today's news. In the first hour of trading, 17,000 calls and 3,041 puts have been exchanged, which is 11 times the intraday average. New positions are being opened at the most popular contract, the February 30 call.

A broader look shows the options pits lean bullish, too. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SAVE's 50-day put/call volume ratio of 8.81 stands higher than 79% of readings from the past year. This means calls were much more popular over the last 10 weeks. 

 

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