Financial professionals were making bullish bets on Monday… straight into a sector which has been pummeled through the coronavirus pandemic.
While momentum trades paid well yesterday, is this particular sector due for a bounce in the days ahead?
Wall Street seems to think so!
|Ticker Code||Ticker Name||Ticker Industry||Price Change||Average Volume (50)*|
|CCL||Carnival Corp||Travel Services||-7.25%||59,868,264|
|NCLH||Norwegian Cruise Line Holdings Ltd||Travel Services||-14.63%||78,863,952|
|SAVE||Spirit Airlines Incorporated||Airlines||-13.62%||37,476,879|
|AAL||American Airlines Group Inc||Airlines||-12.06%||105,399,608|
|RCL||Royal Caribbean Cruises Ltd||Travel Services||-11.24%||23,642,463|
|LUV||Southwest Airlines Co||Airlines||-11.38%||27,329,845|
|DAL||Delta Air Lines, Inc.||Airlines||-10.47%||64,909,912|
|UAL||United Airlines Holdings Inc||Airlines||-7.01%||75,745,993|
|JBLU||JetBlue Airways Corporation||Airlines||-16.15%||21,787,022|
|MKGI||Monaker Group Inc||Travel Services||28.41%||89,285|
|ALK||Alaska Air Group, Inc.||Airlines||-16.04%||4,712,912|
|GOL||Gol Linhas Aereas Inteligentes SA||Airlines||1.92%||3,135,593|
|LTM||M.U.L.-LYXOR MSCI E/EUR||Airlines||0.97%||1,833|
|BKNG||Booking Holdings Inc||Travel Services||-6.68%||681,289|
|HA||Hawaiian Holdings, Inc.||Airlines||-33.84%||1,721,532|
|EXPE||Expedia Group Inc||Travel Services||-8.13%||5,051,258|
|TOUR||Tuniu Corp||Travel Services||3.70%||821,748|
|ZNH||China Southern Airlines Co Ltd||Airlines||0.83%||55,790|
The travel sector has taken a beating through the coronavirus pandemic as flights have been grounded, borders have been closed, and airline companies can’t sell plane tickets to customers.
Delta Airlines (NYSE: DAL), for example, is a company which went from selling $2,000 first-class plane tickets by the thousands and having their own credit cards to a company selling $0 worth of plane tickets whose stock dropped over 50% in about three weeks.
While option players had been consistently bearish on airlines and cruise lines, yesterday I noticed the opposite trend start to take place, on Delta Airlines in particular.
An option player came in and bought $196k of DAL September 18 35 Calls in one trade alone… I can’t recall the last time I saw institutional money place a six-figure bullish option trade on an airline stock.
If bulls are coming into play on airline stocks, Delta Airlines makes sense as a bullish bet as their balance sheet and management is often referred to as the healthiest of all airline companies by economists.
As reopenings have been happening and some travel restrictions are being eased, will airlines soon see their demand surge and be able to resume selling top-tier plane tickets to high paying customers again?
With jet fuel having become about half the price of what it was before the coronavirus pandemic kicked off, Delta’s net revenue might even increase (as a result of their overhead decreasing) if there aren’t too many limitations in place when they resume flights as usual.
I’ll continue to look over the shoulder of financial professional trading activity via unusual options activity and the dark pools, and if I like what I see, I’ll consider making a move myself to get ahead of a herd of newbie retail traders who may hear a potential catalyst come through on CNBC when it’s simply too late.
On the chart above you’ll notice DAL’s 20-day simple moving average line in green… that’s the spot I’ll be watching for smart money moves to possibly take place. Above it and I’ll be bullish within reason. Below it, and I’ll revise my trading plan accordingly and update you via email this afternoon.
Disclaimer: This is not investment advice. This article is for information purposes only and opinion-based on financial advisor data across a selection of websites. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.