Airlines

[oldnemesis]

http://finance.yahoo.com/news/steer-clear-delta-4-other-213209417.html

http://finance.yahoo.com/quote/jets?ltr=1

http://stockcharts.com/h-sc/ui?s=jets

End of summer vacation season looms.

Trade:
With JETS at 22.56
Mar 22/25 bear call spread for a net credit of $90
(bid/ask = .05/2.55)
Yield = 90/210 = 42.9% in 210 days or 74% annualized
Price.......... Profit / Loss............... ROM %
16.50............... 90.00..................... 30.00%
19.00............... 90.00..................... 30.00%
22.00............... 90.00..................... 30.00%
22.31............... 58.94..................... 19.65%
22.90................. 0.00...................... 0.00%
25.00............... (210.00)............... -70.00%
27.00............... (210.00)............... -70.00%
30.00............... (210.00)............... -70.00%
35.00............... (210.00)............... -70.00%

 

[Motobug]

Why next March? What makes you choose this time? Price at this past March was rather high. And, average trading volume is only 40k. The spread could be too big.

 

[Sig]

As Branson said, the best way to become a millionaire is to start out as a billionaire and buy an airline.

 

[oldnemesis]

Why next March? What makes you choose this time? Price at this past March was rather high. And, average trading volume is only 40k. The spread could be too big.

Actually I would have preferred Jan to March but I had to move the trade out to get a good enough return. (I could close in Jan although it is against my practice to do so).

I do not think the price this past March is at all relevant. I realize the chart looks a bit cyclic (switch to weekly) but I don't think that's that important.

The trading volume is important to me only for getting an opening fill, once a fill is achieved I always let the trade expire and never actively close it...unless there is an event forcing me to abandon the trade.

This trade is in sync with my belief that the market is overbought and I am giving preference to short over long.

http://stockcharts.com/h-sc/ui?s=spy