A big factor working in Delta’s favor is their incredibly strong 5-year growth rate. Delta has grown at 20% in comparison to the industry average of 4%. Historically, they have had much higher profit margins and a slightly higher gross margin compared to the overall industry. Their ability to consistently show these types of ratios shows their sustainability down the road. 

Mutual and hedge fund holdings of a company can be strongly indicative of future growth.  As of March, 54% of hedge funds own DAL, up 24% from the previous quarter. Lastly, DAL’s P/E ratio is approximately the mean for the airline industry indicating that it is still growing but also not yet overpriced. When comparing

Delta’s stock price to other airlines with a similar P/E, Delta’s stock price relatively cheap and allows for future growth.

The Trade: I bought the DAL Sep 20 Calls for $.76
Risk: $76 per 1 lot
Reward: Unlimited
Breakeven: $20.76

Greeks of this Trade:
Delta: Long
Gamma: Long
Vega: Long
Theta: Short

—
Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com

The analyst community has been overwhelmingly bullish on FDX. There are currently no sell ratings, 10 holds, and 18 buys. The average price target is $114.

The options with 30 days till expiration are implying a 5% move up or down by their expiration, at 68% confidence level.

salerno.mark.a@gmail.com

Paper bought 10,000 KERX June 4.5 Puts for $.14 when stock was trading $7.25
Paper bought 2500 TXI July 60 Puts (4.5 times usual volume) when stock was trading $66.43
Paper bought 900 BWA April 75 Puts for $1.05 (5.9 times usual volume) when stock was trading $77.45
Paper bought 900 SF Oct 35 Puts for $2.59 (13.2 times usual volume) when stock was trading $36.36
Paper bought 300 IBKR June 14 Puts for $.25 (2.7 times usual volume) when stock was trading $14.74

Paper bought 1000 BKCC Aug 10 Calls for $.40 (19.9 times usual volume) when stock was trading $10.03
Paper bought 8250 DG April 52.5 Calls for $.38 (3.1 times usual volume) when stock was trading $47.65
Paper bought 2575 GOL April 7.5 Calls for $.50 (2.1 times usual volume) when stock was trading $7.47
Paper bought 3683 ALTR June 34 Calls for $2.55 (2.8 times usual volume) when stock was trading $35.04
Paper bought 500 WBSN July 15 Calls for $1.55 (9.9 times usual volume) when stock was trading $15.58

Paper sold 5000 ERIC April 13 Puts for $.70 (4.6 times usual volume) when stock was trading $12.81
Paper bought 3683 ALTR June 34 Calls for $2.55 (2.8 times usual volume) when stock was trading $35.04
Paper bought 19,108 EA June 23 Calls for $.10 (12.7 times usual volume) when stock was trading $17.03
Paper bought 1500 SSRI June 10 Calls for $1.30 (21.4 times usual volume)when stock was trading $10.41
Paper bought 20,562 MU April 10 Calls for $.31 when stock was trading $9.34

According to the firm’s latest 10q, 60% of LULU’s net revenue was derived from the sales of our products in the United States, 35% of net revenue was derived from sales of products in Canada, and 5% of net revenue was derived from sales of our products outside of North America. The firm believes that the vertical retail strategy allows them to interact more directly with and gain insights from customers while providing great control of the brand. Quality control is a serious topic according to the firm.

The April options with 31 DTE (days til expiration) are pricing in a 10% range either way; at a 68% confidence level.

salerno.mark.a@gmail.com