re: My case for Spirit Airlines

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I think it's just too hard to predict how long it will take airlines to come back. Their earnings are gonna be putrid for at least 2 quarters, and who knows when people are going to start travelling like normal again.

Personally I'd rather throw some money into them long term and hope they're running back to normal in a couple of years. If they even get back to their previous 5-year low (which is basically their book value) you're looking at quadrupling your money.

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Another thing to consider with airlines is that even tho they may (they should) receive a bailout, the stock buyback practices they have used in the past to prop their stock will almost assuredly not be allowed. They will survive this but I would not assume the stock goes back to levels we have seen. This entire event has shown that flying is very much a luxury and not a necessity and that when shite hits the fan, they are the first domino to fall.

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Are you already in? At what point did you / others buy in at?

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I bought a little at 7.76. Plan to buy a few more times as I don't think the pain is over.

I think vacation travelers will resume as soon as this is over. I’m not sure about business travel. Have to stuff will continue, but people are finding out that virtual meetings work in a lot of situations.

Spirit is a pretty decent airline actually. I’d choose them over American, Frontier, Allegiant, etc. Probably a wash when it comes to them vs JetBlue.

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Just buy Spirit stock or buy OTM calls that expire in the second half of 2020?

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When IV is high, you will pay a premium for these calls. If IV drops as things stabilize, so will the price of those options you have already purchased. This plus time decay makes it tough is why I havent pulled the trigger on this strategy.

If you plan to buy the stock, take advantage of the high IV and sell near at the money puts expiring that week. Make the premium and you will be put the stock if it closes below the strike price. As long as it's not a share V recovery, you can do this for a few weeks until you're finally put the stock.

What are the odds that Spirit goes bankrupt?

I don’t want to rely on a government buyout to get my money.

Read an article that several airlines will fold by the end of May. Didn’t mention Spirit though.

Outside of their cash position, why is their optimism from you that they won’t fold?

Thank you for this. Bought a hundred shares at $8.

Should have done more.

Good call OP.

(no message)

It’s definitely a trader’s market. I would expect continued volatility