03-26-2020, 10:14 AM
(03-26-2020, 10:01 AM)fenders53 Wrote:(03-26-2020, 09:47 AM)Otter Wrote: Bought some SQQQ and 9/18/20 UAL 35 Puts today on the speculative/high risk side.Airlines will be interesting. They probably have unlimited GOV support but their finances are a mess. I lightened up on my DAL long position on the nice spike. Selling covered calls on the remaining shares.
My short-term play is essentially:
1. Today is the best news airlines will have for several weeks or months with the bailout money passing
2. People won't be spending their $1,200 checks on United Airlines tickets
3. Gov't taking an equity stake = dilution
4. Gov't may not be as hands off with an airline equity stake as it has been in other bailout scenarios (the public hate airlines). There may be gov't pressure to be more passenger-friendly (revenue negative). Even one or two Senators raising the issue publicly could cause shares to crater temporarily.
5. Buybacks banned, so that's one tool of share price support gone.
6. Volatility is still a thing, and when airlines drop, they like to go 10% or more in a day lately.
I think I'll have one big down day to test this theory soon. Not sure there is going to be a huge appetite to hold long positions into the weekend after the week's big runup.