Put Traders Move in on Airline Stock Amid Geopolitical Strife

Travel is another sector suffering a major setback amid the U.S.-Iran conflict, with thousands of flights canceled since Saturday -- numbers not seen since the Covid-19 pandemic. Taking the brunt of it is United Airlines Holdings Inc (NASDAQ:UAL), which has the largest international flight exposure among Stateside carriers. Plus, one of its most profitable routes is to Tel Aviv, Israel. 

UAL is down 3.4% to trade at $102.68 at last check, earlier slipping to its lowest mark since November. The equity tapped a Jan. 7 record high of $119.21, but has since consolidated and pulled back, now off 8.4% year to date.

While analysts have yet to chime in, UAL looks ripe for downgrades and/or price-target cuts. Heading into today, 23 of the 25 covering brokerages sport a "buy" or "strong buy" rating, with the stock's average 12-month price target of $139.23 now a 35% premium to current trading levels. 

Put traders are already moving in, with 8,390 contracts traded so far today. This represents double the average daily volume, with the March 119 call and the weekly 3/6 106-strike call seeing a high amount of sell-to-open activity. 

Options are looking affordable, as United Airlines stock sports a Schaeffer's Volatility Index (SVI) of 61%, which stands in the 22nd percentile of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.