Market Overview

Tony Zhang Says Southwest Airlines Ready For Bullish Options Trade

Share:

On CNBC's "Options Action," Tony Zhang of OptionsPlay said Southwest Airlines Co (NYSE: LUV) will be the airline that best weathers the COVID-19 storm among the major airlines.

The stock recently broke above the $44 resistance level on Pfizer Inc. (NYSE: PFE) and Moderna Inc (NASDAQ: MRNA) vaccine news, and so far it has been able to hold that level. It has also recently outperformed the S&P 500. Zhang sees a base forming around the $44 level and thinks earnings could be a catalyst that could push the stock higher.

Traditionally, Southwest has ranked as the No. 4 airline in terms of seat miles flown, an industry metric, Zhang said. But now, it has moved to No. 2. It is focused on domestic and leisure travel, and it has been expanding its network during COVID-19. Southwest also has a negative debt position.

To make a bullish bet, Zhang wants to buy the March $45/$55 call spread for a total cost of $3.45. The trade breaks even at $48.45 and can maximally make a profit of $6.55.

 

 

Related Articles (LUV)

View Comments and Join the Discussion!

Posted-In: CNBC Options Action Tony ZhangOptions Markets Media Trading Ideas

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com