Options Traders Target Diving Delta Air Lines, Inc. (DAL)

Short-term options traders are holding out hope for Delta Air Lines, Inc. (DAL)

Jan 31, 2017 at 3:26 PM
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Delta Air Lines, Inc. (NYSE:DAL) is succumbing to broad-market headwinds this afternoon, down 2% at $46.73. Of course, this represents the second straight day of sharp losses for the stock, which were burned yesterday following a "systems outage" that impacted flights on Sunday and Monday, as well as the turmoil caused by President Donald Trump's immigration order. From the looks of it, though, some options traders are taking aim at a near-term bounce.

Nearly 20,000 DAL calls are currently on the tape. The most active option by a mile is the weekly 2/3 48-strike call, where buy-to-open activity is likely transpiring. These short-term bulls anticipate the airline stock will rebound above $48 by this Friday's close, when the series expires.

More broadly speaking, however, puts have seen their popularity accelerate in recent weeks. For one, DAL's 10-day put/call volume ratio of 0.62 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the high 78th annual percentile. For another, the stock's Schaeffer's put/call open interest ratio (SOIR) registers at a 12-month peak of 0.79.

Not everyone's a skeptic, though. Of the 11 analysts tracking the shares, eight have handed out a "buy" or better recommendation, with not a single "sell" opinion to be found. Not to mention, DAL's consensus 12-month price target of $61.13 stands at a 31% premium to current trading levels.

Based on the turbulence Delta Air Lines, Inc. (NYSE:DAL) is facing on the charts, the bearish bettors appear to have a more compelling argument. After all, the stock recently gave up support at its 50-day moving average, and is currently testing its 80-day trendline. A breach of the latter could exacerbate losses, and potentially trigger a round of downgrades or price-target cuts.

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