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Bonawyn Eison Sees Unusual Options Activity In Delta Air Lines

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Bonawyn Eison Sees Unusual Options Activity In Delta Air Lines

On CNBC's "Options Action," Bonawyn Eison spoke about unusually high options activity in Delta Air Lines, Inc. (NYSE: DAL) ahead of earnings. He said calls outweighed puts two times to one on Monday, after being evenly distributed throughout the early part of the session.

Options are implying a 7.5% move in either direction between now and Friday, which is significantly higher than the average move of 2.25%.

There was a trade on Monday that caught Eison's attention. Around 14,000 contracts of the July weekly, $26/$27 strangle were traded for $2.35. A trader sold this options structure and collected a premium of $2.35. The break-even for the trade is at $29.35 or around 9.4% higher on the upside and at $23.65 or around 13.4% lower on the downside.

Eison explained that the trader is taking advantage of high implied volatility in the options market while betting that the stock is going to be a bit range bound.

 

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