I love the travel sector…and it loves to throw off cash for income hungry investors.
I am a big believer in the ongoing growth in travel by Millennials and Boomers – more than 170 million American consumers. This group, for the past few years spends their marginal dollar on experience rather than hard goods or clothing. And that generates revenue growth several times that of overall consumer spending.
In travel, I especially like the airlines right now. Jet fuel prices are stable and could fall as the price of oil stagnates.
Airlines have handed my Options Income Blueprint members cash returns of 1.3% per week or $150 each time we traded it.
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( ) (my favorite) is one of the four U.S.-based oligarchs, along with ( ), ( ) and ( ).
I Like American Airlines
I believe American Airlines (AAL) is extremely undervalued and trading at a discount to its peers in the market.
American Airline’s revenue per available seat mile, a critical metric Wall Street uses to judge an airline’s performance, has been headed in the right direction. I expect this to continue.
And AAL has the most upside as a company and as a stock. It has both put and call options with rich premiums and is very easy to trade.
The sector sold off due to concerns about price competition, which I see as overblown. But that gives you and I a great income trading opportunity.
You could sell AAL January 51 strike put today for almost a dollar out of the money that would generate $0.65 or $65 per contract in premium. That’s a 1.3% return in a week, which would translate into a more than 65% annualized return.
This is a longer-term position that will generate a good deal of cash but you could always close it out early for an easy profit if the airlines continue to run.
Enjoy your flight … and take the upgrade in the form of weekly cash income in your portfolio.
Read more about how this strategy actually played out on a trade we closed last week and how you can join us for these kind of trades every week.
About The Author
Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.
Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.
He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com, and he is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.
His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, meaning his trades produce the expected income 98% of the time. No one’s perfect.