Puts Pick Up as JetBlue Airways Corporation (JBLU) Descends

Option bears are piling on JetBlue Airways Corporation (NASDAQ:JBLU) amid sector-wide troubles

by Alex Eppstein

Published on May 20, 2015 at 2:07 PM
Updated on Jun 24, 2020 at 10:16 AM

Sector headwinds are pressuring JetBlue Airways Corporation (NASDAQ:JBLU) lower this afternoon, with the shares last seen at $20.50. Meanwhile, a number of options traders are forecasting extended downside for the stock.

Looking at the data, JBLU puts are changing hands at four times the expected intraday rate. Buy-to-open activity is detected at the security's June 20 put, suggesting speculators think the stock will tumble below the round-number $20 level by June expiration.

The shares approached that level earlier today, but promptly bounced off their rising 40-day moving average. Historically speaking, this trendline has acted as support since last October. However, even if the contracts fail to breach the strike and expire worthless, the buyers can rest easy knowing they paid relatively inexpensive prices for their short-term bets, based on JBLU's Schaeffer's Volatility Index (SVI) of 31% -- which ranks lower than 93% of comparable readings from the past year.

Outside of the options pits, short selling has been popular, despite the stock's 131% year-over-year advance. In fact, nearly 13% of JetBlue Airways Corporation's (NASDAQ:JBLU) float is dedicated to short interest, representing nearly a week's worth of trading, at typical daily volumes. If the stock can resume its longer-term uptrend, a wave of short covering could act as a tailwind.

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