Make some money off airline stocks?

[Dave Benjamin]

I made money off of skywest.

Up about 50% since July. Thanks to a 423 plan employees will make an end of year purchase for around 15 bucks per share. If stock is 30 by then an RJ captain making 80K could see a $12,000 pre-tax profit.

 

[Cyclone]

investing

rule 1 never take investment advice from a pilot
rule 2 don't try to make money "trading" stocks...better off investing in the long haul and using a warren buffet long-term strategy of looking for deals...minimizing transaction costs...patience.

rule 3 if you want some action and want to ignore the above rules buy LUV today...it's down...it will probably pop on earnings announcements on the 20th...expect good news mainly because of the 1-3 buck increase in airline ticket prices. SWA flew ~250,000 flights the third quarter...at 80-120 pax per plane...probably will mean a 20-50 million dollar bonus over and above analyst expectations...short term pop on the good news.

 

[Traderd]

rule 1 never take investment advice from a pilot
rule 2 don't try to make money "trading" stocks...better off investing in the long haul and using a warren buffet long-term strategy of looking for deals...minimizing transaction costs...patience.

rule 3 if you want some action and want to ignore the above rules buy LUV today...it's down...it will probably pop on earnings announcements on the 20th...expect good news mainly because of the 1-3 buck increase in airline ticket prices. SWA flew ~250,000 flights the third quarter...at 80-120 pax per plane...probably will mean a 20-50 million dollar bonus over and above analyst expectations...short term pop on the good news.

As to rule #1, it appears from your profile that you are a pilot, yet you have proceeded to offer investment advice. Should he ignore your rules #2 and #3 so that he may remain in compliance with your rule #1? Is this some kind of circular logic trick?

 

[Cyclone]

i believe rule 1 and 2 are true.

i am guessing about luv on the 20th...but it could happen...anyway even if it does it won't go up more than 4-5%...barely enough to cover the buy...sell...transaction fees, etc...you have to remember when you buy and sell the "spread" is not your friend.

 

[Traderd]

i believe rule 1 and 2 are true.

i am guessing about luv on the 20th...but it could happen...anyway even if it does it won't go up more than 4-5%...barely enough to cover the buy...sell...transaction fees, etc...you have to remember when you buy and sell the "spread" is not your friend.

I'm confused about about the "4-5%...barely enough to cover..." comment. Nothing new, I confuse easily.

In general I work in terms of gains/losses in dollars as opposed to a percentage; just a habit of mine that I have used over the years. But $s are where I program my targets and stops. Obviously one can be expressed in terms of the other.

It would seem that if you buy LUV at $15.38 (the 10/18/05 Volume Weighted Average) and collected 4% a share ( what, about .61 per?), I cannot imagine how the commissions and fees could exceed that gain.

I mean 4-5% is a pretty good amount of money where I come from if you're talking a reasonable time frame. I executed several trades today and will use one as an example (It's the first one executed).

At 1102 I sold short 6000 shares of XOM with an average fill price of $58.08. I covered all open at 1545 at $56.51. 6000 shares @ $1.57 gives me $9420 before commissions and fees. My commissions for that trade were $76 and the SEC fees ran (est - waiting for settlement usually three days) about $15 (sell price x .0000418). Interest is sometimes charged on short sells, if it were to apply here I would expect a few more bucks to go towards costs. I carry sufficient captial in accounts and trade with enough volume that I do not require any broker/platform/data feed fees, but even if they are a component, amortizing a few hunred bucks a month shouldn't add more than a few pennies to the cost.

So it looks like a pretax ST gain of about $9300 (about 2.7%?). A 4% return would have given me around $13K.

I think I must be missing something in your estimate of fees and other costs because it seems like a 4% gain (we are talking gains here of course) should more than cover your costs in a trade.

And by the way, if you're right about LUV you should try your hand at being a "market analyst". You can't be any worse than those that are currently doing the job