Options Trading News

December 19, 2012  Wed 3:16 AM CT

Delta Air Lines is climbing back toward the top of its 2012 trading range, and long-term positions are betting on a floor beneath the stock.

optionMONSTER's tracking systems detected the sale of 20,255 January 15 5 puts yesterday, dominated by a single print of 19,420 that went for $0.51. Open interest in the strike was a mere 37 contracts at the start of the session, so this is clearly new positioning.

The put sellers are betting that DAL will be above the $5 strike price at expiration in 25 months. If it is below that level at that time, the traders will face the obligation to buy the stock at an effective price of about $4.49 once the credit from the put sale is included. (See our Education section)

DAL gained 2.67 yesterday to close at $11.53, continuing its steep ascent since bouncing off the $9 level in mid-November. Shares have been trading for most of the year between about $8.50 and $12.

Yesterday's trading pushed total option volume in the name to triple its daily average for the last month.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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