Delta Air Lines (DAL) is running up following a positive forecast from competitor United Airlines (UAL), which we entered a trade on today. The news took DAL just above our $40 strike price.
I’m not sure the rally in DAL will continue. Therefore, I want to use this opportunity to close the trade around breakeven. Our UAL trade gives us exposure to the travel sector, and we are able to exit a position that was previously underwater at a small profit.
Current Stock Price: $40.09
Cash in Hand: $0.82
Action: Buy to close the DAL May Monthly (5/20) 40 Put
Current Option Price: $0.68-$0.71
Recommended Limit: Set your initial limit order at $0.70, but adjust as needed to close today
Profit: $0.12, or $12 per contract
Potential Rate of Return: 0.3% in 15 days, or 7% on an annualized basis