JetBlue Airways reports earnings next week, and the bulls are
piling on board now.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 5,000 May 9 calls for $0.25 and the sale of an equal
number of May 8 puts for $0.15. Volume surpassed open interest at
both strikes, indicating that new positions were initiated.
The investor will now make money if the airline rallies above $9,
but he or she will be on the hook to buy shares if they fall below
$8. This combination trade cost just $0.10 to open, so it has the
potential to generate significant leverage to the upside or
downside. (See our
section for more on
JBLU is up 4.69 percent to $8.70 in afternoon trading. It rallied
sharply in October and November but has been consolidating since.
Today's trade lets the investor cheaply position for a breakout
from that range without forcing him or her to tie up lots of cash
on stock in the meantime. Quarterly earnings on Thursday, April 24,
are the next likely catalyst.
While airlines have been one of the strongest groups in the last
year, according to our
market-analysis tool, JBLU has lagged the broader industry. It's up
just 19 percent during that time, while Hawaiian, Delta Air Lines,
Spirit Airlines, and American Airlines have more than doubled.
Overall option volume in JetBlue is 7 times greater than average so
far in the session, with the bullish strategy accounting for almost
all the activity.