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Ramblin Wreck
Georgia Tech Fan
Member since Aug 2011
3790 posts

Spirit Airlines options - can someone explain how this works?

I am the unfortunate owner of 1000 shares of American Airlines that I bought at a little above $20 a share. I'm wondering if I should dump it and buy Spirit shares today ahead of the vote to accept the Frontier or Jet Blue offers. It would seem like the stock is going up either way more than my American Airlines will, but if it were that easy everyone would be buying it.


tigercross
Member since Feb 2008
4632 posts

Don't deal with options if you have to ask this question.


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Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
2985 posts

quote:

I'm wondering if I should dump it and buy Spirit shares


There’s nothing about options in your post. Or do you mean, what are your options?

My advice would be to not jump back into an airline stock (or options) at this time, assuming you decide to unload your American shares. Just my 2 cents, so take that for what it’s worth.


Ramblin Wreck
Georgia Tech Fan
Member since Aug 2011
3790 posts

Yes, my question is "what is my best option?" I own a couple of thousand dollars in Spirit, so not a huge profit no matter what happens. However, I'd love to make up for some lost value in my AAL and other stocks if the Jet Blue offer is eventually accepted. The Frontier offer doesn't make a lot of sense to me.

quote:

“Frontier's $21.99 per share bid for Spirit, while notably shy of the sweetened $33.50 level proposed by JetBlue, carries fewer antitrust risks and is considered a ‘superior proposal' by the Spirit board of directors.”

At current prices — with Spirit changing hands around $22.50 — Frontier’s offer represents a roughly 2% decline in the stock price.


slackster
Stanford Fan
Houston
Member since Mar 2009
78982 posts

The Jet Blue offer is almost certainly not going to be accepted, hence the stock price trading much closer to the Frontier offer price.

ETA- it’s a risk reward play, but it’s not easy money, if you’re thinking it is.
This post was edited on 6/29 at 8:25 am


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boogiewoogie1978
Arkansas Fan
Little Rock
Member since Aug 2012
14108 posts

quote:

am the unfortunate owner of 1000 shares of American Airlines that I bought at a little above $20 a share

Do you need the money? Why sell now? Long term I would keep holding and probably buy even more.


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Nation of Buga
Virginia Fan
Sandy Eggo
Member since Aug 2014
2005 posts

You can sell covered $20 calls with a Jan 2023 expiry today at $0.60 a share. There’s $600 today IF AAL gets back to $20. Or sell monthly covered calls at more aggressive strikes.


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