Airliner Puts Pop as COVID-19 Cases Rise

The White House will meet with airline executives on Wednesday

Managing Editor
Mar 2, 2020 at 12:17 PM
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Airline and travel stocks have taken the brunt of the recent broad market sell-off, as COVID-19 cases rise and more people opt to stay home. With the White House set to meet with airline executive officials on Wednesday, stocks Delta Air Lines, Inc (NYSE:DAL) and American Airlines Group Inc (NASDAQ:AAL) are in focus today. Below we'll break down why options traders are targeting DAL and AAL in today's trading.

Delta stock is trading down 1.3% today at $45.56, bringing its one-month deficit up to 18.6%. The shares are on track for an inconceivable 12th straight loss, and earlier today hit a new two-year low of $44.33. This recent activity comes with Delta stock sitting firmly in oversold territory, based on its 14-day Relative Strength Index (RSI) of 21. 

Traders today are opening positions at the September 26 put, with sell-to-open activity detected. There's also buy-to-open activity detected at the March 44 put. Traders were already hammering DAL put options before today. At the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.87 puts have been bought for every call during the past 10 days. This ratio sits in the 100th percentile of its annual range, suggesting this appetite for bearish bets is rare. 

Turning to AAL, put volume is booming today as well. Already 47,000 puts have changed hands today, double the average intraday amount and volume pacing for the 99th percentile of its annual range. New positions are being opened at the April 10 put, followed closely by the 17-strike from the same series. The weekly 3/6 17-strike put is also popular today.

AAL also sits in oversold territory, based on its 14-day Relative Strength Index (RSI) of 26. The shares were last seen trading down 3.8% at $18.32, and earlier fell to a record low of $17.51. It's pacing to be the shares' seventh straight loss, bringing its year-to-date deficit now to 36.4%. 

 

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