LUV – Southwest Airlines Co. – The passenger airline’s shares surged 4.6% to $11.12 this afternoon after the firm revealed passenger revenue per available seat mile jumped approximately 24% in June compared to the same month last year. One options player reacted by taking a bullish stance on the stock in the August contract. The investor sold short 10,000 put options at the August $10 strike to pocket premium of $0.25 per contract. The put seller walks away with the full premium received, that’s a total of $250,000, if Southwest’s shares exceed $10.00 through expiration day next month. The outright sale of the put options indicates the responsible party is happy to have shares of the underlying stock put to him at an effective price of $9.75 per contract should the puts land in-the-money at expiration. Options implied volatility on the stock fell 7.3% to 38.01% by 2:00 pm (ET).
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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