Trump Orders 737-Max Grounding.... Buying LUV puts.

Only 4% of SWs fleet operates the MAX....but people are irrational, so I figured I put a few coins on the table to see if I can get a couple hundred percent return in a few days.
 
*Buying* puts? I'm *selling* puts on LUV and BA.
I'm especially interested in BA because commercial aircraft isn't all they do. They're positively a defense/aerospace powerhouse.
 
I suspect the stock will drop, thus I'm long OTM puts. Whats your play selling? Thinking volatility will drop with this announcement?

I got the 47.5 put long @ $0.10. So, with an uptick in IV tomorrow, I'll make a couple hundred percent return :) .... Its gambling, I know... but I was bored, and I usually don't fiddle with options...or discretionary trading.
 
LUV closed green today and that was after the ground all planes announcement came out. It's currently up almost double the gain that it had during the day in after hours. I don't see how any more negative news can come out from them. BA, maybe, but as you said, it's only 4% of their fleet. Also, I generally hate buying puts on a stock with an 11 P/E, 9 forward P/E. Sold weekly ATM puts earlier expiring this week.
 
ET180 said:
LUV closed green today and that was after the ground all planes announcement came out. It's currently up almost double the gain that it had during the day in after hours. I don't see how any more negative news can come out from them. BA, maybe, but as you said, it's only 4% of their fleet. Also, I generally hate buying puts on a stock with an 11 P/E, 9 forward P/E. Sold weekly ATM puts earlier expiring this week.
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I'm just rationalizing...because I didn't do any actual analysis:
My initial thought was Boeing puts, but they're very expensive. As for the stock closing green...the news didn't seem to start hitting the "mainstream" media until around an hour before the close, and the options weren't any more expensive today than they were on Monday (when I started looking at them)...so, I bought.

I only bought 30 contracts, at $0.10 per .... so if there is some volatility tomorrow, I'll sell them for $0.3 :|D
 
IAS_LLC said:
I'm just rationalizing...because I didn't do any actual analysis:
My initial thought was Boeing puts, but they're very expensive. As for the stock closing green...the news didn't seem to start hitting the "mainstream" media until around an hour before the close, and the options weren't any more expensive today than they were on Monday (when I started looking at them)...so, I bought.

I only bought 30 contracts, at $0.10 per .... so if there is some volatility tomorrow, I'll sell them for $0.3 :|D
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The BA puts were probably more expensive because the underlying is a lot more expensive and there's a lot more risk on BA than LUV. Not sure how easy it will be to convince all the airlines to start flying 737 MAX again. Heard something about a software update, but I have also heard that those airplanes are fundamentally unstable (optimized for fuel efficiency) and rely heavily on control systems to keep them in the air.
 
ET180 said:
The BA puts were probably more expensive because the underlying is a lot more expensive and there's a lot more risk on BA than LUV. Not sure how easy it will be to convince all the airlines to start flying 737 MAX again. Heard something about a software update, but I have also heard that those airplanes are fundamentally unstable (optimized for fuel efficiency) and rely heavily on control systems to keep them in the air.
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What I read was that these planes have larger, more efficient engines. This meant that they had to be mounted somewhat differently on the wing, and this affected the plane's centre of gravity. This caused the nose to have a tendency to point up, and required software to keep it safe.

I do really think this is probably a software issue. Not enough pilots from the sounds of it got enough training, and when things go wrong, they didn't know how to fix it. The plane is only able to react based on what it knows, and when a sensor goes bad, its getting bad info and making bad decisions based on that info. In an article, other pilots said they could only recover once autopilot was fully turned off, but these poor guys in the recent crash probably had no time since it was just after take-off.
 
Some buy LUV put, some sell LUV put.
Timing is important. And some will win , some will lose.

LUV chart is similar to TSLA.
It is going neither here nor there.
 
Seaweed said:
What I read was that these planes have larger, more efficient engines. This meant that they had to be mounted somewhat differently on the wing, and this affected the plane's center of gravity. This caused the nose to have a tendency to point up, and required software to keep it safe.

I do really think this is probably a software issue. Not enough pilots from the sounds of it got enough training, and when things go wrong, they didn't know how to fix it. The plane is only able to react based on what it knows, and when a sensor goes bad, its getting bad info and making bad decisions based on that info. In an article, other pilots said they could only recover once autopilot was fully turned off, but these poor guys in the recent crash probably had no time since it was just after take-off.
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Seaweed, that's what I heard too. My father-in-law is a pilot for a major US airline. He's surprised at how many of the newer pilots rely on auto-pilot and try to manually control the plane as little as possible (although there are usually 2 or 3 pilots in the cockpit so at least there is redundancy). I think what we are seeing with the 737 is not that much different than Tesla's autopilot. Both are complex systems. The more complex a system becomes, the harder it is to robustly test and assure that it is free of defects / flaws. Although I would think the car autopilot is a lot harder to develop than flight autopilot due to collision avoidance / computer vision.
 
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