Slashed Delivery Forecast Dings Airline Stock

The company also reported a first-quarter earnings and revenue miss

Digital Content Manager
Apr 25, 2024 at 10:21 AM
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Southwest Airlines Co (NYSE:LUV) missed top- and bottom-line expectations for the first quarter, and warned that it now anticipates getting just 20 Boeing (BA) 737 MAX planes this year -- less than half what it previously estimated -- which could limit growth into 2025. This was the third cut to those estimates, with the airline noting it will take measures to reduce costs, such as restricting hiring and offering voluntary time off programs.

LUV was last seen down 9.2% to trade at $26.63, its lowest level since December, and is now down 8.3% for 2024. The shares yesterday ran into pressure at the $30 region, which emerged as an area of resistance after a March bear gap, and also capped a rally earlier this month.

Southwest Airlines stock sports a Schaeffer's put/call open interest ratio (SOIR) of 1.44 that sits in the 96th percentile of readings from the last 12 months. This means short-term options trades have been much more bearish than usual.

As for today's options activity, 5,877 calls and 9,921 puts have already exchanged hands, which is six times the volume typically seen at this point. The weekly 5/3 25.50-strike put is the most popular contract by far, with new positions being opened there.


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