Clear Skies Ahead For These Airlines

Hey Traders,

Tomorrow is the big day …

I’m finally revealing my THREE ProShares Ultra VIX Short Term Futures ETF (Ticker: UVXY) trades!

This is a big deal … I’ve been excited about these trades for weeks now.

This 10-to-1 reverse split is an opportunity that doesn’t come around often, and frankly, it’s like Christmas for a volatility trader like myself.

If you want in on these trades, you’re in luck.

My big trade reveal event isn’t until tomorrow (thanks to the market holiday today), so you can still click here to become a member of Volatility Edge, and join me as I reveal these trades live at 12 pm EST!

Of course, UVXY isn’t the only opportunistic trade I’m looking forward to making in the near-term.

President Biden set a goal of “reopening” the country by July 4, and many states are already buckling down and beginning to go about business as usual.

Which is great news for most of us … Except maybe traders. A lot of the “reopening” related upside has already evaporated, but I’m still seeing pockets of value that present some promising trading opportunities.

And as I watch “reopening” stocks begin to take flight, there’s two in particular I’m keeping an eye on.

Looking at all the stocks that still stand to benefit from “reopening,” I think cruise lines and airlines offer perhaps the biggest and best opportunity to get back some real value in the months ahead.

For example, Delta Air Lines (Ticker: DAL).

DAL was hitting highs of $62 in the months before the pandemic struck, but closed out last week at just $47. 

Chart courtesy of StockCharts.

Sure, the shares are nowhere near their 2020 lows, but they’re still well off their 2019 highs. 

And it isn’t like travel rates declined last year simply because people lost interest.

In fact, DAL President Glen Hauenstein said in a conference call last week that domestic travel had already reached pre-pandemic levels, and they expect to actually surpass 2019 demand as the summer wears on.

As pent-up demand continues to unwind, I think there’s plenty of upside ahead, and the airline recovery likely has plenty of room left to run.

I’ll be looking to take advantage of this upside through cheap calls, or a solid call spread setup. If I can find the right opportunity, I will strongly consider making a move here.

I’ve already made a move on another airline, and I’m just biding my time waiting there.

Lots of Legroom For AAL

American Airlines (Ticker: AAL) is also sitting well below its pre-pandemic highs.

 

Chart courtesy of StockCharts.

Leading into the pandemic plunge, AAL was in a slight downtrend, but still consistently cracking above the $30 mark. Although the shares have recovered significantly from their COVID drop, last week the airline closed at just $24.24.

I’ve actually been holding AAL June 18 24-strike calls for just under two weeks, and am looking for AAL to make a move to $25 or higher, when I’ll begin closing my position. I think AAL could still pop to $26 in the near-term, so I’ll be watching the trading volume and momentum on this stock very carefully to decide my next move.

Now, while these two names are the ones that caught my eye, they’re far from the only two names that stand to see plenty of post-pandemic upside. 

For example, Carnival Cruise Lines (Ticker: CCL) and United Airlines Holdings (Ticker: UAL) have similar potential upside, currently sitting below their pre-pandemic highs. They could also become targets for potential call-buying in the coming weeks. 

There’s still a fair amount of “reopening” value to be found if you know where to look.

As the summer heats up and things start to get back to “normal,” I will be keeping an eye out for more trading opportunities in travel stocks like these, hopefully finding some good risk-to-reward ratios on the call side.

In the meantime, I will be hitting UVXY hard to milk the recent 10-to-1 split for all its worth.

Remember, I’m releasing these three trades to my Volatility Edge members tomorrow. Don’t miss them!

Your Only Option,

Mark Sebastian


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