Fuel Costs Hit Southwest Airlines Stock

Options bulls appear to be buying in on today's dip

Deputy Editor
Dec 13, 2023 at 10:57 AM
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The shares of Southwest Airlines co (NYSE:LUV) are sliding today, after the company raised its fourth-quarter fuel cost forecast, though also noting strong leisure demand. At last look, LUV was down 6% at $28.49. 

Today's sharp drop puts the stock on track to snap its four-week win streak. Last session, the equity hit its highest level since September, though the stock could've already been due for short-term dip, as its 14-day relative strength index (RSI) of 91.9 sits firmly in "overbought" territory. Since the start of the year, LUV is down 15.1%. 

Interestingly, call traders are targeting Southwest Airlines stock today. So far, 12,000 calls have been exchanged -- triple the amount typically seen at this point -- in comparison to 4,143 puts. Expiring at the end of this week, the December 30 call is the most popular contract. 

Options look like a good way to go when weighing in on LUV, too. The stock's Schaeffer's Volatility Scorecard (SVS) of 98 out of 100 means the stock has usually exceeded volatility expectations over the past year. 


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