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

Southwest Airlines Co. (NYSE:LUV) was the target of some unusual options trading on Wednesday. Investors bought 40,382 put options on the stock. This represents an increase of 65% compared to the average volume of 24,488 put options.

Southwest Airlines Price Performance

LUV opened at $48.44 on Friday. The company has a debt-to-equity ratio of 0.52, a current ratio of 0.49 and a quick ratio of 0.42. The stock’s 50 day simple moving average is $40.42 and its 200 day simple moving average is $35.14. The firm has a market cap of $25.05 billion, a price-to-earnings ratio of 57.66, a PEG ratio of 0.37 and a beta of 1.16. Southwest Airlines has a 1 year low of $23.82 and a 1 year high of $49.12.

Southwest Airlines (NYSE:LUV) last released its quarterly earnings results on Wednesday, January 28th. The airline reported $0.58 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.56 by $0.02. Southwest Airlines had a net margin of 1.57% and a return on equity of 6.11%. The company had revenue of $7.44 billion during the quarter, compared to the consensus estimate of $7.51 billion. During the same period in the prior year, the firm earned $0.56 earnings per share. Southwest Airlines’s revenue was up 7.4% on a year-over-year basis. Southwest Airlines has set its FY 2026 guidance at 4.000- EPS and its Q1 2026 guidance at 0.450- EPS. As a group, analysts predict that Southwest Airlines will post 1.55 earnings per share for the current year.

Southwest Airlines Dividend Announcement

The firm also recently declared a quarterly dividend, which was paid on Friday, January 16th. Stockholders of record on Friday, December 26th were paid a $0.18 dividend. The ex-dividend date was Friday, December 26th. This represents a $0.72 annualized dividend and a dividend yield of 1.5%. Southwest Airlines’s payout ratio is currently 110.77%.

Analyst Ratings Changes

A number of equities research analysts have commented on LUV shares. Weiss Ratings restated a “hold (c)” rating on shares of Southwest Airlines in a report on Monday, December 29th. Morgan Stanley increased their target price on shares of Southwest Airlines from $48.00 to $50.00 and gave the company an “overweight” rating in a report on Thursday, January 8th. Barclays raised Southwest Airlines from an “equal weight” rating to an “overweight” rating and boosted their price objective for the stock from $34.00 to $56.00 in a research report on Tuesday, December 16th. Citigroup raised their price target on shares of Southwest Airlines from $38.00 to $44.00 and gave the stock a “neutral” rating in a research note on Wednesday, January 7th. Finally, UBS Group increased their price target on Southwest Airlines from $43.00 to $45.00 and gave the stock a “neutral” rating in a research note on Tuesday, January 6th. Six equities research analysts have rated the stock with a Buy rating, eleven have issued a Hold rating and four have given a Sell rating to the stock. According to data from MarketBeat, Southwest Airlines presently has a consensus rating of “Hold” and a consensus price target of $42.63.

Trending Headlines about Southwest Airlines

Here are the key news stories impacting Southwest Airlines this week:

• Positive Sentiment: Company set FY‑2026 adjusted EPS guidance of at least $4.00 (more than 300% above 2025), signaling a large profit ramp driven by its business transformation; management says momentum in bookings supports the outlook. Read More.
• Positive Sentiment: End of open seating and introduction of assigned seats plus new ancillary fees (bags, seat selection, extra legroom) are expected to materially boost unit revenues and margins — investors see this as a sustainable revenue lever. Read More.
• Positive Sentiment: Q4 EPS modestly beat estimates (EPS topped consensus) and operating profit improved YoY, which together with the guidance reduced near‑term execution concerns for many investors. Read More.
• Neutral Sentiment: Revenue in the quarter trailed some expectations (mixed top‑line vs. estimates), so upside rests on management executing the revenue initiatives and sustaining rate trends. Read More.
• Neutral Sentiment: Analysts are re‑rating and updating targets: some price targets were raised while ratings remain mixed — consensus targets still show dispersion, suggesting investor opinion is split on valuation vs. execution risk. Read More.
• Negative Sentiment: Q1 2026 EPS guidance (0.45) came in below some street estimates, creating a near‑term execution risk window even as full‑year guidance is strong. Read More.
• Negative Sentiment: Unusual options activity showed heavy put buying around the report, indicating some traders hedged or bet on downside volatility despite the upbeat guidance. (No single article link available)

Institutional Inflows and Outflows

Institutional investors have recently bought and sold shares of the company. Ashton Thomas Private Wealth LLC raised its stake in shares of Southwest Airlines by 3.0% in the fourth quarter. Ashton Thomas Private Wealth LLC now owns 19,513 shares of the airline’s stock worth $810,000 after buying an additional 572 shares during the period. D.A. Davidson & CO. grew its position in shares of Southwest Airlines by 6.9% during the fourth quarter. D.A. Davidson & CO. now owns 9,511 shares of the airline’s stock worth $393,000 after purchasing an additional 610 shares in the last quarter. Inscription Capital LLC bought a new stake in Southwest Airlines during the 4th quarter valued at approximately $218,000. Verdence Capital Advisors LLC raised its position in shares of Southwest Airlines by 27.8% during the fourth quarter. Verdence Capital Advisors LLC now owns 35,988 shares of the airline’s stock valued at $1,487,000 after buying an additional 7,831 shares during the last quarter. Finally, Golden State Equity Partners increased its holdings in shares of Southwest Airlines by 7.8% in the fourth quarter. Golden State Equity Partners now owns 11,933 shares of the airline’s stock worth $493,000 after purchasing an additional 867 shares during the last quarter. Institutional investors own 80.82% of the company’s stock.

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.