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Options Trading News

April 16, 2013  Tue 11:30 AM CT

DAL: SEE CHART GET CHAIN FIND STRATEGIES
Delta Air Lines is resuming its ascent after stalling in yesterday's market headwinds, and one trader is betting that the stock will hold current levels in coming months.

optionMONSTER's tracking systems detected the sale of 6,000 June 15 puts for $0.84 in 2 minutes today, led by a print of 5,695. This is clearly a new position, as the volume was nearly twice as high as the strike's open interest of 3,078 contracts before the session began.

The put seller is looking for DAL to stay above the $15 strike price through expiration in mid-June. If it falls below that level, the trader will face the obligation to buy shares at an effective price of $14.16 once the credit from the put sale is included. (See our Education section)

DAL is is up 4.63 percent to $15.60 in midday trading. The company is scheduled to release first-quarter results on April 23.

The airline operator hit a five-year high of $17.25 on March 21 but gapped lower on lower revenue guidance in early April. It then bounced off support at $14 and had been rising steadily until yesterday's broad market selloff.

Delta saw bullish call buying at the April 15 strike earlier this month.
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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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