Travel concern Delta Air Lines, Inc (NYSE:DAL) is once again bumping up against recent pressure at its $60 region, just ahead of its fourth-quarter earnings report, due out before the open tomorrow. In the past, DAL has tended towards positive returns the day after its quarterly report, with only one post-earnings move during the past two years falling into negative territory (a 1.5% dip last October, specifically). During these last eight next-day sessions, Delta has averaged a move of 2.2%, regardless of direction. This time around, the options pits are pricing in a slightly bigger swing of 5.3%.
Speaking of options pits, they are brimming with activity today, with 33,000 calls and 17,000 puts across the tape so far -- three times what's typically seen at this point. The January 2020 60-strike call is the most popular. It also looks like positions are being opened at the January 2020 62-strike call for a volume-weighted average price (VWAP) of 23 cents. This means traders will profit if the stock rises above $62.23 (strike plus premium paid) by the time these contracts expire this Friday.
This uptick in bullish bets is nothing new. At the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 3.2 calls have been picked up for every put during the past 10 days. This ratio sits higher than 83% of all other readings from the past year, too, suggesting this preference for calls is unusual.
There are still quite a few holdouts among the brokerage bunch, however. Six of the 13 in coverage call the stock a tepid "hold." Meanwhile, the consensus-12 month target price of $67.26 is a 13.7% premium to current levels.
At last glance, DAL is up 0.5% to trade at $59.32 and pacing for its fourth consecutive win. Looking more broadly, recent support has emerged for the security at its 100-day moving average, which previously acted as a layer of resistance on the charts. Year-over-year, Delta is up 21.8%.