Ok, so maybe that was a bad headline to use but if you have looked at any of the airline stocks this week then you know they have suffered some steep losses. United Airlines
Well the concern is on United adding capacity which may in turn cause a price war, which would then reduce their overall profits. Here's the thing though, with oil prices at these levels the airlines cant afford to have a price war. If this is the case then it means their profit margins will remain the same or improve as their raise prices.
So, we turn to United Airlines.
Now, don't get me wrong, this will not be the stock that turns around in a day or two. This is a serious blow to the stock and it will take some time, but with the economy headed in the right direction and flights as full as can be, if airlines raise prices it could make for a bullish case in the long run. Technical traders will use two targets at this point. One in the $72 area and the other back at $78. This represents a 9 - 18% return.
Option traders will have the best of choices here. Selling puts below current prices will almost certainly lead to a ride to expiration with little stress.