Southwest Options Trader Is Betting On Stock Falling Further By End Of Week

Southwest Airlines Co. LUV shares came under pressure on Tuesday after the airline canceled thousands of flights, which drew scrutiny from officials. The U.S. Transportation Department said Monday evening it would investigate if the outsized share of flights canceled by the company were in its control.

On CNBC’s "Options Action," Mike Khouw of Optimize Advisors said Southwest Airlines traded at 16x average daily put volume on Tuesday and was the 21st busiest single stock option.

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There was a buyer of 8,360 of the December 30- weekly 34-puts at an average price of $0.52 per contract, Khouw mentioned.

The trader sees Southwest’s stock declining further into Friday’s close.

LUV Price Action: Shares of Southwest Airlines dropped 6% to close at $33.94 in the regular trading session on Tuesday, and lost another 0.6% in after-hours trading.

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