How investor is hedging U.S. Airways
David Russell | [email protected]
optionMONSTER's Depth Charge monitoring program detected the purchase of 10,000 January 11 puts for $0.44 and the sale of an equal number of January 10 puts for $0.26. Volume was below open interest in the 10s but not the 11s, indicating that an existing position was rolled from one strike to the other.
The trader is probably using the options to hedge a long position in the Arizona-based airline. The transaction cost $0.18 and provides them an additional $1 of downside protection. (See our Education section)
LCC is down 0.46 percent to $12.96 but is up 29 percent in the last three months. Airlines have been outperforming the broader market with better earnings as years of capacity cuts improve pricing. That helped U.S. Airways beat profit expectations last quarter despite weak overall revenue.
Today's trading in LCC follows bullish option activity in Delta Air Lines earlier this morning.
Overall option volume in the name is triple the daily average so far today, with puts outnumbering calls by 46 to 1.