2 Airline Stocks Seeing Post-Earnings Options Activity

Both stocks are getting blasted in the options pits today

Deputy Editor
Apr 27, 2023 at 1:11 PM
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Options traders have their eyes set on two major airlines after the companies stepped into the earnings confessional this morning. Specifically, American Airlines Group Inc (NASDAQ:AAL) and Southwest Airlines Co (NYSE:LUV) are seeing increased interest in the options pits, though the two equities are making very different post-earnings moves.

American Airlines stock was last seen 1.5% higher to trade at $12.94, after posting a $10 million profit in the first quarter -- its first Q1 profit in four years. The company experienced an increase in flights, which helped revenue outpace higher costs and led to a second-quarter forecast that is at the high end of analysts' estimates.

In response, AAL's options volume is running at triple the intraday average amount. At last glance, 66,000 calls and 32,000 puts have crossed the tape. The two most popular contracts are the weekly 4/28 13- and 13.50-strike calls, respectively.

Today's pop has put the security on the positive side of its year-to-date breakeven mark, but it remains 32.2% lower over the last 12 months. For the last three weeks, American Airlines stock's 20-day moving average has served as a ceiling.

Southwest Airlines stock, meanwhile, is down 4.2% at $29.61 at last glance. The company's first-quarter revenue came in lower than expected, losing $325 million following its 2022 holiday meltdown. Earnings also came in lower than Wall Street's estimates. 

Put traders are taking more interest in LUV following the results, with 27,000 bearish bets across the tape so far today. Total options volume is running at four times the amount typically seen at this point. New positions are being opened at the most popular contract, the weekly 6/9 26-strike put.

On the charts, the security earlier touched a nearly three-year low of $28.81, and is set to close below the $30 level for the first time since March 24. Year-over-year, Southwest Airlines stock is down 35.5%.

 

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