Trade of the Day: Southwest Airlines (NYSE:LUV)

Advertisement

To receive further updates on this Southwest Airlines (NYSE:LUV) trade as well as an alert when it’s time to take profits, sign up for a risk-free trial of Power Options Weekly today

August has historically been a rough month for the market and my indicators are currently flashing red as the fundamentals of the economy appear to be rather weak. We’re showing 1.2% growth in the U.S. economy for the second quarter, which is just terrible. And to be honest, I’m not even sure that number is accurate. The government has been known to fib the data, especially with an incumbent party looking to capture another four years in the White House.

Today, we’ll focus on an airline giant facing headwinds as it has slowly rolled over in what chartists refer to as a “Rounding Top” price pattern. Behind the scenes, unions have criticized Southwest Airlines (LUV) CEO Gary Kelly over flight disruptions, spending billions of dollars on stock buybacks instead of investing in upgrades for the airline’s outdated computer system and for focusing too much on cost controls.

With weakness materializing in the broader market and LUV stock making lower lows, we’ll go with the flow and play the downside using put options that should give us plenty of time to secure healthy gains.

Buy to open the Southwest Airlines (LUV) Dec 33 Puts (LUV161216P00033000).

InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. It’s the perfect “bridge” between investing in ordinary stocks and the turbocharged world of options trading. In Maximum Options, he brings you his personal trades using high-probability, “professional grade” strategies.

Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/trade-day-southwest-airlines-nyseluv/.

©2024 InvestorPlace Media, LLC