Paper bought 8760 DAL Sep 17 Calls for $1.87 (2.3 times usual volume) when stock was trading $17.03
Paper bought 19,361 S Aug 5 Calls for $.15 (5.1 times usual volume) when stock was trading $6.05
Paper bought 9925 GM Jan 2014 30 Calls for $2.74 when stock was trading $29.23
Paper sold 5000 May 45 Puts for $.975 (3.0 times usual volume) when stock was trading $46.30
Paper sold 1520 SNSS July 5 Puts for $.60 (13.6 times usual volume) when stock was trading $5.50
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.
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