by Ian Harvey
October 21, 2019
American Airlines, on October 08, showed that it may be poised for a bullish take over as the chart showed bullish divergence and stock was overbought, and Stock Options Made Easy advised members to execute an options trade on this news.
And, “Armchair Trader” members made 100% profit on a call option.
Are you missing out on these profits? Why not join us and benefit as well!
At the time of the recommended options trade AAL, besides showing bullish divergence and being overbought, there was a falling wedge and bullish engulfing taking shape as well.
On-top-of-this, American Airlines may have fallen too far, too fast – and viewing the chart it was actually bad, therefore, there was a need to question was it actually good!
The stock price, at the time of the trade, was $26.26. A week later the price of American Airlines stock was $28.27. This was sufficient for the options call to provide a profit of 100%.
You can read the full details of the recommended trade for the “Armchair Trader” members HERE.
Another Chance To Profit.....
......American Airlines Group to report earnings this week on Thursday, October 24, before the market opens.
This world's largest airline is expected to post quarterly earnings of $1.36 per share in its upcoming report, which represents a year-over-year change of +20.4%.
Revenues are expected to be $11.94 billion, up 3.3% from the year-ago quarter.
For the last reported quarter, it was expected that American Airlines would post earnings of $1.77 per share when it actually produced earnings of $1.82, delivering a surprise of +2.82%.
Over the last four quarters, the company has beaten consensus EPS estimates four times.
Last Wednesday American Airlines offered some good news in an investor update stating that the airline giant expects its third-quarter pre-tax margin to reach the upper half of the guidance range it had provided in late July. This suggests that American finally may be close to stabilizing its business.
AAL narrowed its revenue guidance range. It said that revenue per available seat mile (RASM) rose 1.5% to 2.5% last quarter, despite the negative impact of Hurricane Dorian, which hit Florida on Labor Day weekend.
The company left its nonfuel cost guidance intact and reduced its fuel cost estimate by $0.02 per gallon. As a result, American Airlines now expects its adjusted pre-tax margin to come in between 6.5% and 7.5% for the quarter.
American Airlines was able to improve its quarterly earnings guidance even though Hurricane Dorian impacted one of its hubs on a busy travel weekend. The carrier's effort to expand at its highly profitable hub in Dallas-Fort Worth seems to be succeeding. This bodes well for American's plan to grow in Charlotte and Washington, D.C. -- its other two most-successful hubs -- over the next two years.
The Boeing 737 MAX should be able to return to service early next year, enabling American Airlines to get back to a fairly normal schedule in time for the peak spring and summer travel seasons. This should lead to better unit cost performance beginning next year. The airline is also in line to receive compensation for its losses from Boeing, which will provide an earnings boost in the future.
One fly-in-the-ointment is the grounding of the Boeing 737 MAX jets in its fleet. As American Airlines has 24 such jets, its bottom line is expected to reflect the impact of escalated non-fuel costs due to the grounding in the to-be-reported results.
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Where to now?
American Airlines is still a long way from matching its peers in terms of profitability. However, investors can at least take comfort that it is starting to move in the right direction -- and the return of the Boeing 737 MAX next year could be the spark needed to accelerate the company's earnings growth.
Where to now for American Airlines?
Will we recommend another options trade on American Airlines?
What will “Stock Options Made Easy” advise members to do?
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!