Spirit Airlines Stock Pops After Earnings

Call traders are continuing to target the stock

Deputy Editor
Feb 7, 2023 at 11:05 AM
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Spirit Airlines Inc (NYSE:SAVE) reported fourth-quarter profits of 12 cents per share on revenue of $1.39 billion before the bell this morning, beating estimates of 4 cents per share on $1.38 billion. At last glance, SAVE is up 1.3% to trade at $19.84, and earlier hit $20.10. 

Several trendlines linger above as potential pressure, including the 100-day moving average, which kept a lid on the equity's mid-January rally. Year-over-year, the equity is down 21.6%. Shares are due for a short-term bounce, though, as their 14-day Relative Strength Index (RSI) of 26.3 sits firmly in "oversold" territory.

Analysts have yet to chime in after the results, though the majority are bearish. Of the eight firms in coverage, seven carry a "hold" or worse rating. It's also worth noting that short interest represents 7.2% of the stock's available float, or nearly 10 days' worth of pent-up buying power. 

Options traders have been more optimistic. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 4.55 calls have been bought for every put in the last 10 days. This ratio ranks higher than 81% of readings from the past year. Today, call volume is running at triple the intraday average, with 2,989 calls traded. The weekly 2/10 20.50-strike call is the most active contract.

The stock is seeing attractively priced premiums at the moment, per its Schaeffer's Volatility Index (SVI) of 48%, which sits in the 23rd percentile of its annual range. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 85 out of 100, meaning SAVE has exceeded option traders' volatility expectations over the past year.


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