Someone's expecting it to go up...
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Delta Air Lines shares set a new year low of $7.92 following fellow airline operator SkyWest Inc's lowering of its profit outlook. For details, see Delta's early option activity suggests at least one investor believes the shares have reached a bottom and will rally over the coming months, said Patrick Mortimer, director of options trading at Pipeline Trading Systems. The September $9 calls have volume of more than 11,000 contracts traded already with one block of 7,944 contracts purchased for a premium of 31 cents per contract. These options will need shares to rally 16.3 percent from a share value of $8.01 level by September expiration for the buyer to begin to see any profits. Also showing bullish sentiment is the activity in the August $9 puts, as more than 7,000 contracts have traded with a majority of the activity on the bids, he said. Mortimer noted the strike's open interest is high enough to cover this activity so the trading in these puts could be investors closing out bearish long put positions. Total option volume is about 33,000 contracts, consisting of 21,000 calls and 12,000 puts crossing the tape by early afternoon, nearly double the average daily volume, according to Trade Alert.