Lower altitude seen for U.S. Airways
David Russell | firstname.lastname@example.org
optionMONSTER's Depth Charge tracking program detected the purchase of 10,000 June 14 puts for $2 and the sale of an equal number of June 10 puts for $0.28. Volume was more than twice open interest at both strikes, indicating that new money was put to work.
Known as a bearish put spread, the trade cost $1.72 and will earn a maximum profit of 133 percent if the Arizona-based airline closes at or below $10 on expiration. The investor may be using the strategy as a hedge on an existing long position or as a speculative bearish play. (See our Education section)
LCC rose 0.3 percent to $13.37 yesterday. It rallied strongly through early this year, touching its highest levels since February 2008. But it then formed a potentially bearish "head and shoulders" pattern, with a lower high two weeks ago, which could be leading some chart watchers to expect a reversal lower.
Total option volume was twice the daily average in LCC yesterday, according to the Depth Charge, with puts accounting for a bearish two-thirds of the total.