Once again, the bulls are coming back to Delta Air Lines.
The stock is already up 45 percent this year, and has given call buyers winning trades time and time again. Just last week , for instance, our Heat Seeker monitoring program detected blocks of the May 17s changing hands for $0.33. Those contracts have more than doubled to $0.75 since then.
The Heat Seeker shows much longer-term positioning today, but the sentiment remains bullish. This time a block of 5,000 January 2015 20 calls was bought for $2.78. Volume is more than 12 times previous open interest at the strike.
The long calls have locked in a $20 entry price on DAL over the next 19 months, no matter how high the stock may fly. The trader may wish to leverage a move or may be using the contracts to make sure it doesn't run away before he or she has the capital to buy the stock outright. (See our Education section for more on how options can be used to manage trades.)
DAL is up 3.74 percent to $17.47 in afternoon trading and is the best-performing member of our airline group on researchLAB this year. The company took the unusual step of buying an oil refinery a year ago and has benefited from that move as fuel prices rose and refinery stocks rallied. Fares have been going up as well, which let profit beat expectations on April 23 despite revenue missing consensus by a narrow margin.
Total option volume is still below average in the name today, but calls outnumber puts by a bullish 13-to-1 ratio.
More From optionMONSTER
- Why large trader is selling calls in MBIA
- Largest option buying in equities so far
- Index, ETF option volumes near midday
- Investment & Company Information
- Delta Air Lines