Delta Airlines Inc. [NYSE: DAL, 51.80] is up just over 5.25 percent on the year – with 4 percent of those gains coming in Monday’s session. The stock has traded in a 52-week range of $34.61-$51.82, having hit the 52-week high in Monday’s session.
Two large blocks DAL Call Options traded today in between 2:42 and 2:43 pm Eastern Time, as a trade rolled out their position in DAL Call Options.
A block 21,894 DAL Fri 12/11 (Weekly) 50 Calls were sold to close for $1.64, as the trader collected $3,590,616 in premium.
Just 16 seconds later, 44,625 DAL Dec15 52.5 Calls were bought for $0.77 with the trader paying above the ask. This order represents an outlay of over $3,436,125 in long premium.
DAL stock trades an average daily volume of around 13.8 million shares. The call contracts in the latter order above have the potential to control nearly 4.5 million shares – nearly one third of the daily float. The DAL Dec15 52 Straddle closed Monday’s session at $2.49, implying a move of around 4.8 percent in the 11 days remaining until December expiry.
One of my favorite strategies for unusual options activity is to give myself a little more time than the order whose sentiment I seek to track.
I’m looking out one week further to the DAL Thu 12/24 (Weekly) Options. This only gives me about 3.5 extra days, since the market closes at 1 pm that Thursday in observance of the Christmas Holiday.
My Trade: Buy the DAL Thu 12/24 Weekly 52.5-54 Bull Call Spread for about $0.55
Risk: $55 per 1 lot
Reward: up to $95 per 1 lot
Break-even (Share price at expiration): $53.05
Note, the DAL Dec15 52.5 Call buyer’s break-even is $53.27, so my outlook has more time and is slightly less bullish. I always like to watch for traders who are rolling positions – if they were right once, I believe there’s a good chance they will be right again.
As always, you can learn more about trading options and watching order flow as part of our weekly online workshop series.
