Unusual Options Activity: United Airlines Holdings (UAL)

Airliner United Airlines Holdings (UAL) has held up well over the past year, with a 12 percent gain amid the market’s overall 10 percent drop. One trader sees that outperformance continuing in the months ahead.

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  • That’s based on the January 2025 $45 calls. With 672 days until expiration, 5,497 contracts traded compared to a prior open interest of 143, for a 38-fold rise in volume on the trade. The buyer of the calls paid $11.13 to make the bullish bet.

    United shares recently went for about $43, so shares would need to rise just $2.00 for the option to move in-the-money. That’s still well under the stock’s 52-week high of $55, which it hit in February.

    The airline may also benefit from a slowing economy, as lower fuel costs could lower one of the airline’s biggest expenses.

    United continues to move towards full capacity following the travel disruptions that occurred during the pandemic, so there’s still room for the airline to perform well, even in a slowing economy.

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  • Action to take: Shares still look inexpensive at 5 times forward earnings. If United can lower costs or boost revenues, it can increase its profitability from here, which the market should love.  While shares don’t pay a dividend, they may still have market-beating upside from here.

    For traders, the January 2025 options have over a year and a half to play out. Chances are shares will rebound from the most recent selloff, which could lead to mid-double-digit gains on the option in just a few months.


    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 of the companies mentioned in this article.

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