LATAM Airlines Q2 Results: Short Covering Holds, Options Tick Up

LTM delivers its Q2 results today with the short-side unwind that dominated the August 1 preview now fully consolidated — and a mild uptick in options caution providing the one new wrinkle heading into the print.

The short-covering story documented earlier in the week has stabilised rather than reversed. Estimated short interest edged down another 1% on August 3 to roughly 1.66 million shares — down 45% from the month-ago peak near 3.7 million. Borrow conditions remain relaxed: availability has actually loosened further to 152%, meaning lenders are sitting on nearly 8.3 million shares they have not placed, and borrowing costs have drifted to 0.61%. The lending market is no longer a source of pressure in either direction.

Options positioning has nudged slightly more defensive since the August 1 preview, though the move is modest. The put/call ratio ticked up to 0.75 on Tuesday — its highest reading in recent weeks and now running about 1.7 standard deviations above the 20-day mean of 0.74. That is a cautious lean rather than an alarm signal, and the 52-week context makes clear the market is nowhere near peak hedging demand. The stock itself has added 4% over the past week and 2.1% on Tuesday alone, closing at $55.66, which means options buyers are paying slightly more for protection into a stock that has been rising.

The institutional picture offers some context on who holds the conviction. Lauca Investments remains the dominant holder at 13.2% of shares, and BlackRock added over 565 million shares in the most recent reported quarter — a meaningful increment for a name of this size. Ninety One UK entered as a new holder in the period. Those flows suggest the institutional base has been broadening even as short sellers retreated.

Today's print is less about whether the short-covering thesis was correct and more about whether LATAM's underlying margin profile — a Piotroski F-score of 9 and 16% annual revenue growth as of recent score data — can hold up under scrutiny of the actual Q2 numbers.