Unusual Option Activity: United Airlines (UAL)

Airline operator United Airlines (UAL) has been in an uptrend for the past few weeks, and has now reversed its losses from 2023. One trader sees a further rally in the weeks ahead.

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  • That’s based on the February 16 $45 calls. With 37 days until expiration, 15,099 contracts traded compared to a prior open interest of 553, for a 27-fold rise in volume on the trade. The buyer of the calls paid $1.56 to make the bullish bet.

    United Airlines shares recently traded for just under $43, so UAL would need to rise $2, or just under 5 percent, for the option to move in-the-money. The strike price is still well under the stock’s 52-week high of $58.23.

    UAL has had a decent year, with revenues up 13 percent, and earnings up 20 percent. The decline in oil prices over the past few months is likely to improve profitability.

    At current prices, UAL trades at 0.3 times its price to sales, and at less than 5 times forward earnings.

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  • Action to take: Investors may like shares here, as the stock looks relatively undervalued compared to the market and shares are in an uptrend.

    For traders, the February $45 calls play to the current short-term trend. The option can likely return mid-double-digits on further upside in shares in the coming weeks.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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