Shares of Delta could fly high when it reports earnings this week, according to some traders.
The Atlanta-based airline is scheduled to announce first-quarter earnings before the bell Thursday, and the options market is implying a 4 percent move for the stock in either direction. Delta’s shares have struggled to take off this year, now down more than 6 percent since January.
However, “Options Action” trader Mike Khouw says there could be signs of resurgence ahead. “Delta is liked a lot by options traders,” Khouw said Monday on CNBC’s “Fast Money.” “We saw about 3-to-1 calls over put volume.”
On Monday, a number of traders also bought the June 52.5 call options for an average of $3.50 per contract. “Those are bullish bets that Delta will be up about 5 percent by June expiration,” Khouw said.
Despite struggling to make gains for the year, shares of Delta are still up nearly 17 percent in the last 12 months. Of the 17 FactSet analysts covering the stock, 15 have it listed with a buy rating, with an average price target of $72.56. That would imply a gain of about 40 percent for the shares from their current levels.
Last quarter the airline beat on both revenue and earnings-per-share expectations, while also raising its guidance for 2018. Delta citing savings under the new tax law, as well as an increase in consumer demand as catalysts for growth.
Shares of Delta were higher midmorning Tuesday, trading at $52.20.