The Best Airline Stock to Play in 2018

Between the long security lines, runway delays, canceled flights, and power outages like the one in Atlanta, it’s easy to see why the Christmas holiday has been crowned the worst time to fly of the year by the U.S. Travel Association.

Now if you’re one of the “lucky” 51 million people to travel between December 15 and January 4 this year, chances are you’ve got at least one horror story to share (I’ll tell you mind in a second). But even if you’re not, I’m willing to bet you’ve had your own travel nightmares at some point in time.

Either way, there’s a little-known way for you to “get your money back” from these airlines.

And the best part is, you don’t have to talk to a single customer service agent.

I’m going to be blunt with you…

When it comes to “making your money back” on airlines, the best way to do it is with options. Compared to trading futures, buying and holding shares of stocks, or dollar cost averaging into mutual funds that invest in airline stocks, options are the faster, easier, and lowest-risk route to take.

Now there are a couple of exchange traded funds (ETFs) with underlying airline stock holdings, like the Industrial Select Sector SPDR ETF (XLI) and the US Global Jets ETF (JETS). The top four holdings of this ETF are Southwest Airlines Co (LUV), Delta Airlines Inc. (DAL), United Continental Holdings Inc. (UAL), and American Airlines Group Inc. (AAL). All of these are 11.5% and higher in weighting for the ETF, with all other stock holdings  coming in under 5%.

The options activity on this ETF are very thin; hardly any options contracts are being traded, which results in very wide bid ask spreads in the options. And even though there is a bit more options trading activity in XLI, neither are really an ideal situation for an options trader.

So we’re going to talk about the best airline stock of the four to trade in 2018…

But before we get started, I want to remind you that I’m not a stock broker or a registered financial advisor. I don’t manage others’ money, and I’m not offering any stock recommendations to buy or trade. I’m showing you what I’m looking at and what the patterns and numbers reveal about the best profit opportunities in 2018. So be sure to talk to your financial professional before placing a trade.

Now let’s get started…

LUV started the year around $50 and is now trading around $65. That’s a 15-point gain – or a 30% increase…


DAL began the year around $50 and is now around $56 – a six-point gain (or a 12% increase)…


 AAL started the year around $47 and is now around $51 – a four-point gain (or a 9.75% increase).

My readers are very familiar with AAL… In fact, just a few months ago, they had the chance to score 223.94% total gains on AAL in just 16 days. Click here now to find out what recommendations they’ll get next…


Before we get to the last one, I want to share my little “flightmare” with you about this particular airline…

My wife and I decided to fly direct from our home in Sarasota, FL to New York in order to avoid the Atlanta airport and that power outage. Now you probably remember the passenger who was dragged off a flight earlier this year… our experience was nothing like that. But it still wasn’t a good one…

We got stuck on this sub-standard plane that seemed like its technology was at least a decade old and sat on the runway for two hours because of it. We had first-class seats, which seemed like a good deal – but my wife’s chair wouldn’t recline at all. There were about three flight attendants struggling to get her seat into an upright position but cvouldnt. So naturally, I switched seats with her and had to assume the “brace-for-impact” position landing into Newark. Needless to say, it wasn’t a fun ride.

And this isn’t the first time we’ve had problems, either…

So it comes as no surprise to me, personally, to see a 10.9% decrease in the UAL (or eight points) since the beginning of the year…


Of these four, both LUV and DAL are making new 52-week highs. Between the two, I give the slight nod to LUV in 2018 because it had a higher point and percentage gain – which indicates a stronger performance moving ahead in both categories.

And if you asked me which option strategy I would consider, I’d tell you I’d favor taking a “flyer” on bullish Long-Term Equity AnticiPation Securities (LEAPs). LEAPs are long-term stock options with expirations as far out as two and three years. LEAPs allow you to take part in a price increase without the high costs of buying the stock outright. And since LEAPs have much longer expirations, you’ve got much more time for the trade to move in your favor.

Keep in mind that this is purely a technical view for these stocks. If you want to pursue the fundamentals in each of these, I will not disparage you or that additional due diligence.

To your continued success,

Tom Gentile

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3 Responses to “The Best Airline Stock to Play in 2018”

  1. I am using options as my first choice in all my trading BUT I have a problem in determining how much to allow for “margin’..thus sometimes that requirement keeps me from getting filled.
    Can you define how to do this?

  2. Hi Tom – I’d think that waiting until the end of the month might be prudent for LUV. Look at past history and find growth spurts pretty much at the same time every year!! I’ll be using an option with enough time value in it that I won’t be badly hurt by it’s decay when it’s time to invest at the end of the month.

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