Major Options Alert in US Airways (LCC)

Posted in Options 
July 26th, 2010

US Airways Group, Inc. (NYSE: LCC) is the airline nobody wants, or so it seems, when it comes to an airline merger.  What if that notion is wrong?  US Airways shares are at $10.68 and the 52-week range is $2.25 to $10.87.  Exponential gains were available for those who took a stab and held on.  The stock was under $6.00 as recently as February.  There was a very unusual options alert that came off this morning in US Air’s stock via the AUG-2010 CALLS:

CALL$    Volume    OpInt
$9.00    4,447    17,288
$10.00    18,581    23,271
$12.00    34,183    859

What appears to have happened is that a trader locked in significant gains in the $10 strike call options for August.  The $9.00 calls may have been a part, but we did not see those as active until right before posting this notion.

A trader appears to have locked in major upside gains at more than $1.00 and rolled some of the profit proceeds into the higher $12.00 strike call options to keep some potential upside of US Air’s shares keep running.

Despite no major negative earnings reports from the major money center and super-regional banks in America, the Q2-2010 reports seen so far in this July’s earnings season has brought a mixed fanfare for the major US banking giants.

Generally speaking this is not a new speculation trade, but it can be indicative that a bullish trader still has some hope of a deal or further positive development.  Locking in gains and pressing part of the bet to stay positive (as we have just seen)  is still a better indication that taking the money off the table entirely.

JON C. OGG

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