On Thursday, shares of Spirit Airlines (NYSE:SAVE) saw unusual options activity. After the option alert, the stock price moved up to $26.93. * Sentiment: NEUTRAL * Option Type: SWEEP * Trade Type: CALL * Expiration Date: 2021-02-19 * Strike Price: $30.00 * Volume: 1904 * Open Interest: 2703Three Signs Of Unusual Options Activity Extraordinarily large volume (compared to historical averages) is one indication of unusual options market activity. Volume refers to the total number of contracts traded over a given time period when discussing options market activity. The number of contracts that have been traded, but not yet closed by either counterparty, is called open interest. A contract cannot be considered closed until there exists both a buyer and seller for it.The trading of a contract with an expiration date in the distant future is another sign of unusual activity. Generally, additional time until a contract expires increases the potential for it to reach its strike price and grow its time value. Time value is important in this context because it represents the difference between the strike price and the value of the underlying asset.Contracts with a strike price far from the underlying price are also considered unusual because they are defined as being "out of the money". This occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made because the underlying asset value is expected to change dramatically in the future, and the buyer or seller can take advantage of a greater profit margin.Understanding Sentiment Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price.These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.Using These Strategies To Trade Options Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.For more information to understand options alerts, visit https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alertsSee more from Benzinga * Click here for options trades from Benzinga * Unusual Options Activity Insight: Airbnb * Understanding FuelCell Energy's Unusual Options Activity(C) 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Investors who buy airline stocks may now have to endure some pain and take a “leap of faith” that revenues will recover sharply in the second half of the year, one analyst says. Airlines came into the new year with high hopes of sustaining some momentum from December, when air traffic soared around the holidays—reaching highs not seen since the pandemic started. About 6.7 million doses of vaccines have been administered, according to the Centers for Disease Control and Prevention.
In the third quarter, Spirit lost $99.1 million, or $1.07 per diluted share. For the first three quarters of 2020, its operating revenue fell by 54.2% year over year, while net income swung to a loss of $271.39 million from a profit of $254 million in the prior-year period. Dependent on its fourth-quarter cash burn, Spirit still seems to be trading in an acceptable valuation range.