Airline stock Southwest Airlines Co (NYSE:LUV) was last seen up 2.8% at $44.15, trading at fresh three-year highs after a rare double-upgrade from J.P. Morgan Securities to "overweight" from "underweight." The firm expressed excitement over the company's 2026 earnings prospects, throwing in a price-target hike to $60 from $36.
On the charts, LUV enjoyed a sharp upswing from early to mid-December, and today broke above pressure at the $43 level that had been in place since then. On track for its fifth-straight gain, the shares are up 7% since the start of 2026, and 34% year over year. Support from the ascending 20-day moving average is coming into play as well.
Though short interest has been unwinding, down 19.6% during the last two-week reporting period, it still represents 5% of the stock's available float. It would take shorts nearly three days to buy back their borrowed shares, leaving some pent-up buying power.
Further bull notes could provide tailwinds, as 18 of the 26 analysts in coverage still carry a "hold" or worse rating on Southwest Airlines. Plus, the 12-month consensus price target of $40.45 sits at a roughly 9% discount to current levels.
An unwinding of pessimism amongst options traders could help lift the shares, too. LUV's 10-day put/call volume ratio of 2.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 91% of readings from the past year, while its 50-day put/call volume ratio of 2.19 sits higher than 98% of readings.
When weighing in on LUV's next move, options look like a good way to go. The equity's Schaeffer's Volatility Index (SVI) of 36% sits in the low 12th percentile of its annual range, meaning options traders are pricing in low volatility expectations.
