Insights 
VT 
Delta Air Lines is set to announce its earnings. The chart indicates a head and shoulders pattern, with the neckline traced from the end of June through July.
Delta operates widely, serving both domestic and international destinations. Its business hinges on passenger travel, loyalty schemes, partner programmes, and cargo operations, meeting both leisure and business travel demands.
Should the head and shoulders pattern complete, Delta’s stock could dip below $46. There is a pivot low from the end of June at this level, offering support. Proper risk management is essential, as earnings days can bring sharp volatility.
Traders might feel driven to take risks on earnings days, but it is advisable to rely on technical analysis. If the pattern completes and momentum supports it, actions will be taken; otherwise, patience until clearer signals is advised.
Given the head and shoulders pattern pointing to a potential drop, we are considering bearish positions ahead of Thursday’s earnings. Buying puts is the most direct way to bet on a move below the $46 neckline. This strategy would profit from a sharp downward move post-announcement.
However, implied volatility for the weekly options is elevated, currently sitting around 55%, which is high for the year. This means options are expensive, and we face the risk of volatility crush after the earnings are released. A bear put spread could be a more cost-effective way to express this view while defining our risk.
We’re also watching the macro environment, as rising fuel costs present a significant headwind for the entire sector. With WTI crude prices consistently trading above $95 per barrel this quarter, up from an average of $85 in late 2024, margin pressures are a real concern. This fundamental pressure supports the bearish technical setup we are seeing on the chart.
The narrative around demand is also mixed, as a recent Global Business Travel Association report from Q3 2025 noted corporate bookings remain about 15% below pre-pandemic highs. We saw a similar situation after the July 2025 earnings report, where strong headline numbers were overshadowed by cautious forward guidance. This history reminds us that the outlook management provides will be just as important as the reported results.
For those expecting a more muted drop or even a sideways grind after the announcement, selling a bear call spread could be an effective strategy to collect premium and benefit from the expected fall in volatility. Regardless of the strategy, we must emphasize disciplined position sizing. The post-earnings move could be sharp, and predefined risk levels are more important than any single opinion.
