Possible Green Days Ahead for AirlinesNot in any positions, but it looks like make it or break it time for UAL.
UUUNITED AIRLINES HOLDINGS INC CEDEAR EACH 5 REP 1 COM (USD)
18.50USDD
+2.30+14.20%
As of today at 18:35 GMT
USD
No trades
UALD trade ideas
OPENING (IRA): UAL MARCH 19TH 33 SHORT PUT... for a .91 credit.
Notes: Here, an addition to my Jan '22 47 covered strangle in UAL to reduce cost basis further, which currently consists of (a) a Jan '22 47 covered call; (b) a February 19th 35 short put; (c) a March 19th 33 short put; and (c) a June 18th 32 short put. Cost basis is currently at 42.75 versus where the underlying is currently trading at 40.27.
30-day's at 67.3% with expiry-specific at 66.7%, with earnings in the rear view, so it could be fine as a stand alone trade (2.84% ROC at max as a function of notional risk).
Cup and HandleIntra-year cup and handle pattern..
UAL looks to be encountering R right above price so maybe a pullback on way..pull backs are healthy and there are no rising wedges noted in the yearly chart..throwbacks are when a stock breaks out only to return down under breakout level..
Not far above long entry level as I write this and the handle low as well as mid cup can provide support..there is also a small gap under price that may provide support
Not a recommendation
Cup and Handle Earnings 1-20 AMCMaybe the world will go back to normal one day?Valid at long entry level..
Support can be found at handle low (HL) and mid cup (MC). Mid cup is close to handle low. If HL goes below MC, pattern is invalidated..
Cup depth is 19.72
Good to research and not listen to everyone else (Like me..LOL) Any pattern can fail..Not a recommendation
Short Selling Put OptionsI’m Markus Heitkoetter and I’ve been an active trader for over 20 years.
I often see people who start trading and expect their accounts to explode, based on promises and hype they see in ads and e-mails.
They start trading and realize it doesn’t work this way.
The purpose of these articles is to show you the trading strategies and tools that I personally use to trade my own account so that you can grow your own account systematically. Real money…real trades.
Short Selling Put Options
When short selling put options, a question people ask me is,
“Okay, Markus, how do you decide what strike price do you want to sell and whether there’s enough premium in there?”
I made a put options calculator called “The Wheel Calculator” that I gave away as part of my recent class on selling put options (Theta Kings) that helps me determine just that.
This calculator is now also integrated within The PowerX Optimizer Software as well.
Using my put options calculator, I can enter a few different figures and it quickly lets me know if this stock makes sense to sell put options on.
I started a small account with $25,380, and have continued to grow it substantially.
This was all done by selling put premium using my handy put options calculator!
So let’s take a look at a few examples using the airlines.
Here’s how you can quickly compare if an option makes sense to sell.
So United Airlines UAL , at the time of this is trading at $31.08/share.
So I’m going to take a look at the April 24th expiration and the $20 strike price.
I’m thinking maybe it would be a good idea to sell the $20 United Airlines UAL put option.
So now that I have the strike selected that I would like to sell put options on, let’s take a look at the premium these options have. This will let us know if this trade actually makes sense.
Right now, the Bid/Ask is $0.74 over $0.87. So I probably can get $0.80 for selling this option. This is all I need to enter in my spreadsheet, along with the expiration.
With the needed inputs entered into my handy dandy put options calculator it tells me,
“United Airlines can drop 36% and you’ll still be okay.”
It has to drop 36% before we get in trouble. I think that’s pretty good odds in my opinion.
The cool thing is that it also says that based on my account size, I should buy 17 options, and I would collect $1,320 in premium.
So this means that per day I would get $110 in premium. That’s not bad at all if I can make $100 on just one position.
And I like to have 4 to 5 positions in my account at any given time.
So based on the number of positions I like to have, this means that you can make $400 to $500 per day collecting premium. I like this a lot because it means annualized I would make 87%!
87% is nothing to sneeze at, right?
Short Selling Put Options — American Airlines
So now let’s do this same thing with another airline, American Airlines AAL , and see how the numbers look.
So like we did with UAL , I’m looking at what strike price in relation to where AAL is trading would it make sense to sell.
For American Airlines AAL it looks like probably the $8 strike price would make sense right here.
You always want to do it below the previously established low. So let’s take a look at American Airlines AAL .
The price right now is $12.26. the options strike price, we said we’d probably have to look at is $8.
Here we’re able to collect $0.35 per contract at the $8 strike price.
And you see, I could actually, since American Airlines is so cheap, buy 41 options based on my account size.
So 41 options and I would collect $1,444 in premium. This means I would get $120. That’s not bad at all.
And you see, American Airlines AAL also can drop 35% and we would still be OK. We only get in trouble if American Airlines over the next 15 days drops more than 35%.
Possible?
Yes. This is why you should always be willing to own the stock.
And this is why you want to make sure that you’re not getting in trouble. You need to adjust your position size based on your account.
Here obviously, I don’t want to trade two airlines because if airlines are crashing, they probably all do. With that said, let’s take a look at Boeing AAL .
Boeing Example
I like trading Boeing. I'm looking at a Boeing AAL chart to see where might be a good level here to sell Boeing.
Based on where AAL is trading at right now, it looks like $100 would be a good level to take a look at.
Let’s first try a strike price of $100, shall we? For $100 we get probably a $1.55 right here, with Boeing AAL trading right now at $150.
So if we were to sell the $100 put option on AAL , we are looking to make $1.55/contract.
And you see, this means that Boeing AAL could drop 33%, so we’re good here.
However, we can only buy three options.
Why?
Because Boeing AAL is really expensive.
So if we would have to buy Boeing at $100, this is when it gets expensive, right?
So you see, the strike prices here are much, much, much lower.
This is where you see I would only trade three not to overextend myself.
And that’s very important when you’re selling puts. You want to make sure that you’re not overextending yourself because otherwise, you’ll get margin calls.
Margin calls are ugly. A margin call means that your broker tells you,
“I want more money.”
You want to avoid that at all costs!
Because if you don’t have the money, you would have to sell the stock at a price that you don’t want.
Usually, this is how you can wipe out an account.
Anyhow, you see this is how we would only make $43 a day.
Let me ask you, what would you rather make? $110 to $120 per day? Or $43 per day?
I don’t know about you, but for me, these are better.
So it’s very easy to quickly compare which options you should be trading when you’re selling puts.
One of my favorite trading strategies right now is selling puts.
This is what you have seen in the past few examples.
My goal is to make $400 to $500 per day by doing so.
The best days to sell puts is on a down day.
On a down day, the VIX is usually shooting up and options premiums are higher.
This is exactly what you’re looking for as a premium seller.
For experienced options traders, selling put option premium in an environment like this can be a great way to consistently generate income, even if the stock doesn’t do exactly what you want.
I hope this helps!
Is United Airlines Taxiing for Takeoff?United Airlines has gone almost nowhere for two months. But now the chart may be lining up for a rally as earnings approach.
UAL exploded higher on November 9 when Pfizer’s vaccine news hit. It continued upward the following month before retreating in late December.
Since then, the airline has stabilized between $42 and $44. It’s also holding support at its 50-day simple moving average (SMA).
The 21-day exponential moving average (EMA) was resistance during that time -- until the last two sessions when UAL closed above it. That could signal the trend is turning bullish again.
Also notice the rounded bottom between December 21 and this week.
Finally, UAL’s Bollinger Band Width is the narrowest since late October. Earnings are next Thursday afternoon. Can prices stay in this super tight range before the news, or will buyers sneak in early?
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Airline StocksJust getting my 5 reputation points. I put my $1200 stimulus into airline and cruise ship stocks back in March. All of these stocks have doubled in price since the start of the pandemic, but most of them are still half of their pre-pandemic price. I was surprised that airlines dropped over Christmas, but they usually tend to trend upward after the holidays and in the summer. I'm expecting a few bumps due to that, especially in the summer when the vaccine is made more available.
United Airlines direction, where now?United Airlines seems to be aiming to around 40.5 after breaking down the uptrending tunnels.
Watch for a rebound at around 40.5 which can be a great entry. Around 40.5 seems to be a great support zone!
Also my AHL indicator shows narrowing highs and lows which can be interpreted as a reversal might occur soon.
VaccineRecent sell off from a positive vaccine news may continue in the short term. Airline industries will pick up starting January. To think of it, everyone travels for holidays and business. The fact that southwest is picking up more passengers is because of lower middle income family travelling. United will pick up more once businesses start going back to normal again. Businesses because of many reasons among which are network security, novelty/secrecy/excitement factor of their ideas, needs to have personal business communications with their business partners etc they need to travel. Families who postponed their vacations, who got fed up with this pandemic, seniors after getting their vaccine shots, and many more would like to go travel places. Travelling by car is not an option here because of traffic and time related issues. The fact that this vaccine is rolling out during winter means that people living in cold places will travel to the south maybe Hawaii if you like. All these and others add up to a big spike in travelling. Officials will urge people to get vaccinated by maybe scaring people of the next version of corona is coming which is deadlier if you dont take the shot. These and other tactics they use will urge massive numbers of people to get immunized
