Southwest Airlines Stock Soaring as Reservations Increase

Southwest Airlines is seeing ticket reservations rise again

The shares of Southwest Airlines Co (NYSE:LUV) are up 4% to trade at $28.15 today, after the company announced via press release that ticket reservations have finally legged out ticket cancellations for the month so far. And just recently, Southwest added some flights back to its network which will lead to an overall capacity decline between 45% and 55% in June compared to the 60% to 70% seen in May.

On the charts, LUV has been guided downward by its 20-day moving average, a trendline that's acted as resistance for much of the year. Now four days removed from its a six-year bottom of $22.46, Southwest Airline stock is set to close above thattrendline -for the first time in a month, thanks to today's gain and a 13.4% pop yesterday. Year-to-date though,it should be reminded that the security is still down 47%.

Analysts have been hesitant to rush forward with bear notes, despite the sector's well-publicized struggles. Of the 16 in coverage, nine sport a "strong buy," while the rest rate LUV a tepid "hold." Meanwhile, the consensus 12-month price target of $39.06 is an optimistic 38.5% premium to current levels.

In the options pits, LUV's 50-day call/put volume ratio of 1.91 at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranks in the elevated 71st percentile of its annual range. This suggests a much healthier appetite for long calls of late.