Frontier Group (ULCC) Surges 14.96% Intraday: Short Squeeze or Analyst Optimism?

Summary
• Frontier Group (ULCC) rockets 14.96% to $6.495, hitting a 52-week high of $10.26
• Short interest ratio at 6.3 days to cover, signaling potential squeeze
• Analyst consensus remains 'Hold' with $6.25 average price target
• Options volume spikes on $6 and $7 strike calls ahead of February 20 expiration

Frontier Group’s stock is experiencing a dramatic intraday rally amid a surge in call options activity and elevated short interest. The 14.96% jump from $5.65 to $6.495 has pushed the stock near its 52-week high, despite a 'Hold' consensus from 10 analysts. With short sellers facing a potential squeeze and options traders betting on continued momentum, the market is now testing key technical levels and analyst price targets.

Short Interest and Analyst Optimism Fuel Volatility
Frontier Group’s 14.96% intraday surge is driven by a combination of short covering and analyst-driven optimism. Short interest stands at 18.43% of float with a 6.3 days-to-cover ratio, creating a self-fulfilling upward spiral as short sellers scramble to buy shares to limit losses. Meanwhile, recent analyst upgrades—including a $10.00 price target from UBS and a $8.00 target from Morgan Stanley—have injected bullish sentiment. The stock’s 52-week high of $10.26 remains a psychological barrier, but the current rally suggests short-term traders are capitalizing on the short squeeze dynamic.

Airlines Sector Mixed as Delta Air Lines (DAL) Leads Gainers
The broader airlines sector shows mixed momentum, with Delta Air Lines (DAL) surging 7.47% to $75.18, outpacing Frontier Group’s 14.96% move. While ULCC’s rally is driven by short-term speculative activity, DAL’s gains reflect broader sector optimism amid improving demand for air travel. Frontier Group’s 18.43% short interest contrasts with Delta’s 3.90% short float, highlighting divergent investor sentiment within the sector.

Options and ETF Plays for Frontier Group’s Volatility
• MACD: 0.134 (bullish divergence), Signal Line: 0.077, Histogram: 0.058 (positive momentum)
• RSI: 58.56 (neutral to overbought), Bollinger Bands: $4.60–$5.70 (current price above upper band)
• 200D MA: $4.37 (price at 150% above), 50D MA: $4.62 (strong support)

Frontier Group’s technicals suggest a continuation of the short-term bullish trend, with key resistance at $6.50 (52-week high) and support at $5.77 (intraday low). The ULCC20260220C6 call option (strike $6, expiration 2/20) offers a 122.22% price change potential with 8.17% leverage and 93.94% implied volatility. This contract’s high gamma (0.274) and theta (-0.025) make it ideal for a short-term rally. The ULCC20260220C7 (strike $7, 88.11% IV) provides 180% upside with 22.55% leverage, capitalizing on the short squeeze. For ETF exposure, consider XLE (Energy Select Sector SPDR) to hedge against fuel cost volatility impacting airlines. A 5% upside scenario (target $6.82) would yield a ULCC20260220C6 payoff of $0.82/share and ULCC20260220C7 payoff of $0.32/share. Aggressive bulls should target a $6.50 close by 2/20 to validate the short squeeze thesis.

Backtest Frontier Group Stock Performance
The conclusion is derived from the backtest data where ULCC showed a 15% intraday surge in 2022, but no further performance details are provided. Therefore, it is unclear what metrics were used for the backtest or how ULCC performed after the event.

Frontier Group’s Short Squeeze Intensifies: Act Before 2/20 Expiry
Frontier Group’s 14.96% intraday surge is a textbook short squeeze scenario, amplified by elevated short interest and analyst optimism. With key resistance at $6.50 and options expiring February 20, traders must act decisively. Delta Air Lines (DAL)’s 7.47% gain underscores sector strength, but ULCC’s volatility offers higher-risk, higher-reward opportunities. For a bullish play, target the ULCC20260220C6 call option to capitalize on the short squeeze, while monitoring the 52-week high as a critical breakout level. Watch for a $6.50 close by 2/20 to confirm the squeeze’s success.