Southwest Airlines Target of Unusually High Options Trading (NYSE:LUV)

Key Points

• Unusually high bearish options activity: Investors purchased 23,905 put options on Southwest Airlines, 75% above the typical daily volume.
• Shares declined 2.3% to $38.74 during Monday trading, while analysts maintained an overall “Hold” rating with an average price target of $49.01.
• Southwest exceeded quarterly earnings and revenue estimates, announced a quarterly dividend of $0.18 per share, and remains heavily institutionally owned, with funds holding 80.82% of the stock.

Southwest Airlines Co. (NYSE:LUV - Get Free Report) was the recipient of some unusual options trading activity on Monday. Stock investors acquired 23,905 put options on the company. This is an increase of 75% compared to the typical daily volume of 13,683 put options.

Wall Street Analyst Weigh In

A number of equities research analysts have recently issued reports on the stock. Wall Street Zen raised shares of Southwest Airlines from a "hold" rating to a "buy" rating in a report on Sunday, July 5th. Susquehanna raised their price target on shares of Southwest Airlines from $44.00 to $55.00 and gave the stock a "neutral" rating in a research note on Tuesday, July 7th. JPMorgan Chase & Co. lowered their price target on shares of Southwest Airlines from $60.00 to $59.00 and set an "overweight" rating on the stock in a research report on Friday, July 24th. Jefferies Financial Group raised their target price on Southwest Airlines from $44.00 to $50.00 and gave the stock a "hold" rating in a research note on Wednesday, July 1st. Finally, Raymond James Financial reduced their price target on Southwest Airlines from $60.00 to $54.00 and set an "outperform" rating on the stock in a report on Monday, August 24th. Nine equities research analysts have rated the stock with a Buy rating, nine have assigned a Hold rating and four have issued a Sell rating to the company's stock. According to MarketBeat.com, the stock has an average rating of "Hold" and an average price target of $49.01.

Southwest Airlines Trading Down 2.3%

LUV stock traded down $0.90 during mid-day trading on Monday, hitting $38.74. 2,106,037 shares of the company were exchanged, compared to its average volume of 7,680,513. Southwest Airlines has a 12-month low of $29.26 and a 12-month high of $55.11. The firm has a market capitalization of $18.95 billion, a P/E ratio of 23.77, a PEG ratio of 0.36 and a beta of 1.14. The business has a fifty day simple moving average of $46.59 and a 200-day simple moving average of $44.05. The company has a quick ratio of 0.42, a current ratio of 0.49 and a debt-to-equity ratio of 0.54.

Southwest Airlines (NYSE:LUV - Get Free Report) last released its quarterly earnings results on Wednesday, July 22nd. The airline reported $0.94 EPS for the quarter, topping the consensus estimate of $0.52 by $0.42. Southwest Airlines had a return on equity of 14.15% and a net margin of 2.78%.The business had revenue of $8.72 billion during the quarter, compared to analyst estimates of $8.58 billion. During the same period last year, the business posted $0.43 earnings per share. The company's quarterly revenue was up 16.4% on a year-over-year basis. Southwest Airlines has set its FY 2026 guidance at 3.250-4.250 EPS and its Q3 2026 guidance at 0.500-0.750 EPS. On average, equities research analysts predict that Southwest Airlines will post 3.32 earnings per share for the current fiscal year.

Southwest Airlines Announces Dividend

The firm also recently announced a quarterly dividend, which will be paid on Thursday, September 24th. Investors of record on Thursday, September 3rd will be issued a $0.18 dividend. This represents a $0.72 annualized dividend and a yield of 1.9%. The ex-dividend date of this dividend is Thursday, September 3rd. Southwest Airlines's dividend payout ratio is 44.17%.

Hedge Funds Weigh In On Southwest Airlines

A number of institutional investors and hedge funds have recently added to or reduced their stakes in LUV. AQR Capital Management LLC raised its holdings in Southwest Airlines by 100.6% during the first quarter. AQR Capital Management LLC now owns 39,347 shares of the airline's stock worth $1,303,000 after purchasing an additional 19,729 shares in the last quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. boosted its holdings in shares of Southwest Airlines by 5.4% in the 1st quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 61,060 shares of the airline's stock valued at $2,050,000 after buying an additional 3,141 shares in the last quarter. Empowered Funds LLC grew its position in shares of Southwest Airlines by 7.6% in the 1st quarter. Empowered Funds LLC now owns 7,459 shares of the airline's stock valued at $250,000 after buying an additional 527 shares during the last quarter. EverSource Wealth Advisors LLC grew its position in shares of Southwest Airlines by 73.4% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 5,690 shares of the airline's stock valued at $185,000 after buying an additional 2,408 shares during the last quarter. Finally, First Trust Advisors LP raised its stake in Southwest Airlines by 47.4% during the 2nd quarter. First Trust Advisors LP now owns 307,602 shares of the airline's stock worth $9,979,000 after acquiring an additional 98,986 shares in the last quarter. 80.82% of the stock is owned by institutional investors and hedge funds.

About Southwest Airlines

Southwest Airlines Co is a U.S.-based low-cost carrier that operates a point-to-point domestic and near-international airline network. Headquartered in Dallas, Texas, the company primarily flies Boeing 737 aircraft and offers no-frills, single-class service designed to keep fares competitive. Southwest's operating model emphasizes high aircraft utilization, quick turnaround times and an open seating policy, allowing customers to board and select seats on a first-come, first-served basis.

Founded in 1967 by Herb Kelleher and Rollin King as Air Southwest Company, Southwest began commercial service in 1971, initially connecting Dallas, Houston and San Antonio.

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