Southwest trade gives more tough love

By
A A A

Southwest Airlines has been getting some tough love from government inspectors, and now it's paying the price with investors.

optionMONSTER's tracking systems detected the sale of 10,000 May 11 calls for $1.10 and $1.15 against open interest of just 45 contracts. The trade reflects the desire by a single large investor to unload 1 million shares of the Dallas-based carrier.

By writing the calls, the trader locked in an exit price of $12.10 to $12.15 as long as LUV remains above $11 by expiration. Even if it falls below that level, the premium they received today will protect them against some of the decline.

LUV is down 1.89 percent to $11.92 in late morning trading and lost more than 5 percent of its value in the last week. The company faces increased scrutiny after the fuselage tore on one of its Boeing 737-300s aircraft, raising concerns about its aging fleet.

The company's next earnings report is scheduled for before the bell on April 21, so investors may be expecting an update on the situation then.

The call selling pushed total option volume in the name is more than triple the daily average so far today.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: LUV

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

79%

Most Active by Volume

100,376,898
  • $17.62 ▲ 0.51%
83,231,837
  • $25.62 ▲ 1.91%
75,739,329
  • $111.78 ▼ 0.77%
65,297,937
  • $36.37 ▼ 1.76%
59,053,093
  • $47.66 ▲ 0.29%
53,482,350
  • $2.59 ▼ 0.38%
51,504,284
  • $7.34 ▲ 2.37%
51,434,656
  • $8.14 ▲ 6.96%
As of 12/19/2014, 04:15 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com