Higher Crude Doesn't Deter Delta Air Lines, Inc. (DAL) Bulls

Delta Air Lines, Inc. (DAL) traders are buying April calls, even as the stock drops

by Griffin Kruse

Published on Apr 6, 2015 at 2:38 PM
Updated on Jun 24, 2020 at 10:16 AM

Delta Air Lines, Inc. (NYSE:DAL) is down 1.2 % at $41.74 -- a year-to-date low -- following its sector peers into the red as traders react to a significant jump in crude oil prices. On the charts, the shares of DAL have been sliding, down 18.3% since hitting an all-time high of $51.06 on Jan. 23. However, some options speculators are betting on the security to reverse this downtrend, as call activity is ramping up.

One of today's most active contracts is the April 48 call, where potential buy-to-open activity has been detected. By purchasing this call, traders predict the security will shoot north of the strike price -- toppled only once on a closing basis since late January -- by the close on Friday, April 17, when the option expires. DAL will report first-quarter earnings on Wednesday, April 15.

This preference for calls echoes recent sentiment in the options pits, as DAL's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.57 ranks higher than 94% of all equivalent readings taken over the past year. Additionally, the security's Schaeffer's put/call open interest ratio of 0.41 sits in the 16th annual percentile, showing that near-term speculators have rarely been this call-heavy.

Meanwhile, the brokerage bunch is unanimously bullish on Delta Air Lines, Inc. (NYSE:DAL), as all 13 covering analysts rate the stock a "strong buy." This coverage leaves the door wide open for a round of bearish analyst attention to create headwinds for the shares.

Daily Chart of DAL Since October 2014

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