By David Russell of OptionMonster
NEW YORK -- Delta Air Lines
(DAL) reports earnings next week, and the bulls are getting on board early.
OptionMonster's tracking programs detected the purchase of more than 12,000 June 34 calls for $1.24 to $1.26 on Tuesday. The volume was more than five times the previous open interest in the strike, indicating that new positions were initiated.
Long calls lock in the price where a stock can be purchased, letting investors cheaply position for a rally. That way they can get long at a fraction of the cost of owning shares and enjoy major leverage in a rally, but the contracts could expire worthless if the shares stall or decline.
Delta's stock rose 0.57% to $31.91 Tuesday and has fallen almost 13% after hitting an all-time high above $36 earlier this month. It has been on a monster run since the end of 2012, and Tuesday's traders clearly saw the recent pullback as a buying opportunity. Transports have also been strong recently.
First-quarter results come out before the opening bell next Wednesday, April 23.
Total option volume in the name Tuesday was more than twice its daily average, with calls outnumbering puts by almost 4 to 1.
Russell has no positions in DAL.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts