Ready to Reboard Southwest Airlines

If you’re like everyone else who has been cooped up during the pandemic, you’re not just thinking about what fun you’re going to have this weekend.

You’re also thinking about what fun you can have this summer.

For many, those fun summer plans include air travel.

If the stellar numbers over the Memorial Day weekend are any indication of future demand, it looks like people are taking to the skies in record numbers.

This is great news for Southwest Airlines (NYSE:LUV).

LUV is in a sweet spot in the airline industry because of its domestic focus.

Yes, air travel is picking up worldwide. But as coronavirus hot spots continue to flare up internationally, we think air travel within the United States is going to be much more stable and profitable.

To take advantage of this, we recommend selling to open a new put write on LUV.

Now is a great time to sell puts because the stock is dropping down toward support at $57, and put premiums are always juicier when the underlying stock is dropping.

We chose to set our strike price at $57 because it lines up well with the down-trending support level that has been interacting with the stock since it started consolidating in April.

And we chose an early July expiration date, which means we should start to see time value erode from this option rather quickly.

Over the intermediate term, we fully expect LUV to bounce up off this level and move back toward the top of its consolidation range.

On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it.

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