Airlines Stocks Spike Up On the Opening Bell
At the time of writing this article every single stock in the S&P 500 is up today which is something that has not occurred once in the last few weeks. The next few weeks will certainly shape how we are going to be able to respond to these kind of spikes in the market. Large rapid spikes that occur in bearish market can just be bullish players trying to take control of the market. If overall mentality and perspective the global environment does not improve in quality for business and individual then these large bullish spikes can be quickly lost with strong bearish control of the market.
At the start of the trading day stocks jumped up below from major lows in the market. Some stocks such as Gol Airlines (GOL) jumped up over 25% in the first 5 min of the day. Overall the market is rally up quickly now the question is will it hold or is this just another bear rally.
As we are waiting for the powers in our government to pass through a bill to pump funds back into the market many investors are trading based on the optimism that there will be strong surge of price coming up. Trading based on just the optimism of government passing a bill is a strategy that may potentially lead to undesired results. As we wait on the sidelines patiently waiting for a bill to be passed we are left at the mercy of politics as compared to earnings and balance sheets of the company.
To state that we are currently at the bottom of the market is certainly a statement that is difficult to currently verify. We do not have the full picture yet to determine if we are indeed at the bottom of the market.
When is time to Start Buying?
Entering in for long positions with price being at such a low right now can be a great opportunity for long term investors to be able to secure great stocks at a discounted price right now. Although prices are extremely low a strategy that one can implement to be able to control risk in a volatile market condition is by spacing out entries or exits in the market.
If you plan on purchasing a total of 100 shares maybe buying in with 25 share increments will allow you the opportunity to be able to start entering positions while also maintaining risk. Should price come back down to a lower more attractive price you can then still have free capitol to add additional positions.
In the same note when closing out trades during rallies in the market if unsure to hold on in hopes of greater gains or selling off in fear of the market dropping down again. Selling partial positions allow you to be able to secure some profits while also remaining active in the trade. These kind of simple strategies help investors be able to manage risk during extremely volatile market conditions.
‘Work-From-Home” Recommendation in Aviation
With the spread of Coronavirus globally many countries and organizations have stressed the concept of working from home to prevent the spread of germs in the work place offices. While for many organization this has been able to be a smooth transition many other organization have certainly experienced an issues as a result.
For the airline industry, customer service representative can be trained and provided equipment to be able to work from home and still be able to assist the customer with their booking. Although for Pilots, Flight Attendants and mechanics working from home may not be an options. Although drone technology is capable of maneuvering aircraft remotely the confidence in the technology is not to the level of application in the commercial aviation industry.
With 70% of flights globally being suspended these individuals have been asked to stay at home for weeks without pay. These factors certainly are playing a great role in the nations infrastructure as many of these airlines require the services of fuel companies, catering companies, hotel and restaurant services, and more. With one major industry experience a significant drop is economic activity small regional airports are now experiencing almost complete halt of activity.
Considering that the aerospace industry often requires a great portion of individual to be active in the field the industry is struggling currently. At the time being as we look forward into the future we need to take into consideration the time frame of trades we are going to be taking over the next few weeks.
With high volatility the potential to be able to capitalize on the rich premiums of the market can potentially provide for great opportunity for shorting options in the market. In the same note with prices being extremely low placing long calls with expiration dates as far as 6 months to over a year provide for rich Theta to be able to give the stock significant amount of time to be able to play out to its break even price.
Patience will allow for investors to be able to earn significant gains without the need to expose large amount of capitol. In the times currently where market conditions are still filled with uncertainty being able to keep free capitol is a secure way to be able to ensure that
Fly Leasing (FLY)
Fly Leasing us up 30% in the first 30 min of the trading day. We are currently seeing the stock rally up dramatically. Although currently trading volume is very low the stock is currently trading at a price the is very attractive for many long term investors. The spike up to its high of 6.52 for the morning followed off by a quick sell off .
Understanding the structure of the business we notice that they are not directly focused in their ability to sell seats on an aircraft or space in the belly of the aircraft. They are an organization focused in purchasing and owning quality aircraft to then be able to lease them out on short term basis to clients in need of the aircraft.
The structure of their business allows them to keep operating cost low to help maximize free capitol and revenue. As demand for travel rises this positions Fly Leasing to be able to supply the airlines in need with quality aircraft quickly and efficiently. The process for purchasing a new aircraft can take months and for some even years of negotiating and preparing the aircraft. When leasing an aircraft you have an opportunity to be able to gain access to the aircraft quickly and efficiently to be able to get it into service as soon as possible.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
Air Market Group content is provided solely by Air Market Group LLC and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction, or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. Air Market Group, through its content, financial programming, or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon, or risk tolerance. Air Market Group is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Multi-leg option strategies incur higher transaction costs as they involve multiple commission charges. Air Market Group is not a licensed financial advisor, registered investment advisor, or registered broker-dealer. Options involve risk and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options before deciding to invest in options.
Donations from readers like you help keep this blog running. We appreciate your support!