Put Volume Explodes Amid Allegiant Stock Nosedive

ALGT put volume has hit record levels during the past three sessions

Managing Editor
Apr 17, 2018 at 12:47 PM
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Allegiant Travel Company (NASDAQ:ALGT) stock has been getting pummeled in recent sessions due to a 60 Minutes investigation into the budget airliner's propensity for in-flight mechanical issues. Ahead of the TV segment, which aired Sunday, ALGT stock fell 8.6% on Friday, and has since continued its descent, last seen 1% lower at $145. As one might expect, options traders have been loading up puts during this turbulence.

The unusual trading activity began on Friday when nearly 2,300 puts traded. At that time, the average daily put volume was just 29 contracts. The most popular contract by far was the April 150 put. And activity only picked up on Monday, when 2,448 puts traded -- a 52-week high. Again, the April 150 put was most popular.

Turning to today's action, puts are outpacing calls 794 to 61, and the April 135 and 145 puts are most popular. Overall, put open interest now stands at 3,653 contracts -- an annual high -- compared to just 916 in call open interest. It's also worth noting that the 30-day implied volatility skew has jumped to 48.1%, 1 percentage point from an annual high, showing volatility expectations are much higher-than-normal for puts compared to calls.

Elsewhere, short interest had been rising on Allegiant for basically the past year, with over 10% of the float dedicated to shorted shares. Going by average daily volumes, it would take these bears more than eight sessions to cover their positions.

Allegiant stock has now given back roughly 20% since touching an annual high of $181.45 on March 14. The shares breached their 200-day moving average yesterday for the first time since late November, and are set to post their third straight weekly loss.

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