An opening customer buyer paid 14cents for more than 11000 69% out-of-the-money “DOOM” puts on Delta Airlines this morning, opening a position in the Jan14 3 strike puts that would need to see DAL trade below their March 2009 all-time low to expire with any value. Might offset a credit trade on the airline. The premium suggests roughly a (14/286) 4.8% chance of DAL defaulting in the next 450 days.
About the Author (Author Profile)
Henry Schwartz is the president of Trade Alert LLC, a provider of real-time options analysis tools to leading Wall Street firms. His systems analyze hundreds of thousands of transactions per second to help professionals identify and interpret market activity in real time, supporting informed trading decisions and intelligent idea generation. He has held institutional trading and management roles with Bank of America, Bear Stearns, Salomon Brothers and the Hull Group, and made markets on the CBOE and AMEX floors in the US, and EUREX and MONEP overseas. Prior to founding Trade Alert, he led the electronic market-making group at Bank of America coincident with the launch of the International Securities Exchange. He received his bachelor’s degree in Economics from the University of California, San Diego and his MBA from NYU’s Stern School of Business.