Three Airline Option Trades

Airline stocks have stabilitized from the spring and early summer selloffs, and it seems like there will be some government stimulus to help them get through the impact of the pandemic.

With shares of Boeing trading at $173 we are selling the June 2020 $150 Puts that expire in 15 days for $1.23. That's a decent premium for a $23 discount on BA shares in 2 weeks, and we'll likely keep the premium as the Puts should expire at $0.

Shares of Southwest Airlines (LUV) trading at $36 we are adding a synthetic long-dated bullish position by:

Selling the Jan 2022 $30 Put for $6.30 and buying the Jan 2022 $50 Call for $7.50. Each set of these options costs us a net $1.20, which is cheap for a long exposure of 100 shares of Boeing for the next year and a half. This trade should payoff very well and we will likely sell far before expiration.