gougler08 said:

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So looks like airline earnings are coming up in the next couple of weeks, got to think those are going to be rough right? Seems like it makes sense to see the fallout from those and then hop in?

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Earnings reports are already priced in. What's going to be the next real mover is the amount of government grants and loans and THE TERMS of getting those monies. Some airlines will go up and done won't. Monitor the negotiations which is hard to do. But the bulk of the money will be made by those who find out before you read about it in the WSJ. Good luck!

IrishTxAggie said:

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Think it's a bit premature to say the past couple months is priced in on airlines already. There's a lot to be mentioned in the ER that hasn't necessarily been covered by reports so far.

Even with a bailout, I would not be shocked to see 2-3 US based airlines go belly-up.

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My question is this: would an index of airlines already be priced such that a bankruptcy of a major airlines not impact the index because the market share of the other airlines would increase. Another words if you assume the market is pricing in the size of the airfare market correctly it doesnt matter if a company goes bankrupt?

texagbeliever said:

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IrishTxAggie said:

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Think it's a bit premature to say the past couple months is priced in on airlines already. There's a lot to be mentioned in the ER that hasn't necessarily been covered by reports so far.

Even with a bailout, I would not be shocked to see 2-3 US based airlines go belly-up.

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My question is this: would an index of airlines already be priced such that a bankruptcy of a major airlines not impact the index because the market share of the other airlines would increase. Another words if you assume the market is pricing in the size of the airfare market correctly it doesnt matter if a company goes bankrupt?

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Disclaimer: I don't trade or invest in airlines but I'd lean more towards the market leaning towards a bailout for them than some going under. If a few do go bankrupt, then danger is still there in the one's that do and the one's that don't should go up substantially. Picking the winners and losers at this point is above my pay grade.

texagbeliever said:

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IrishTxAggie said:

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Think it's a bit premature to say the past couple months is priced in on airlines already. There's a lot to be mentioned in the ER that hasn't necessarily been covered by reports so far.

Even with a bailout, I would not be shocked to see 2-3 US based airlines go belly-up.

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My question is this: would an index of airlines already be priced such that a bankruptcy of a major airlines not impact the index because the market share of the other airlines would increase. Another words if you assume the market is pricing in the size of the airfare market correctly it doesnt matter if a company goes bankrupt?

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The index just passively passes on the value of each underlying asset as it's individually priced/valued.

What I think you're alluding to is just the whole basis of why an index fund exists. If 2 airlines go bankrupt but you're holding the whole sector, then you may lose 100% of those companies but they only make up 1-10% of the investment which may only be 5% of your overall portfolio. Doesn't mean the value of other Co.s hasn't gone down, just from pure bankruptcy it's <1% of your assets

Prognightmare said:

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texagbeliever said:

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IrishTxAggie said:

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Think it's a bit premature to say the past couple months is priced in on airlines already. There's a lot to be mentioned in the ER that hasn't necessarily been covered by reports so far.

Even with a bailout, I would not be shocked to see 2-3 US based airlines go belly-up.

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My question is this: would an index of airlines already be priced such that a bankruptcy of a major airlines not impact the index because the market share of the other airlines would increase. Another words if you assume the market is pricing in the size of the airfare market correctly it doesnt matter if a company goes bankrupt?

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Disclaimer: I don't trade or invest in airlines but I'd lean more towards the market leaning towards a bailout for them than some going under. If a few do go bankrupt, then danger is still there in the one's that do and the one's that don't should go up substantially. Picking the winners and losers at this point is above my pay grade.

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That I think is what I'm getting at. I think a bailout would increase the value of all the airlines because the risk of bankruptcy decreased for all of them. That price increase wouldnt account for the fact that the market outlook hasnt improved for the industry in terms of demand so the values should fall back down. So a pure short term play.

If a bailout doesnt occur and a major goes under than the other airlines in the index will grow in value in relation to the value lost by the existing entity.
Now flaws here would be an outside entrant capturing market share. Or no bailout happens and the market gets worse (but this will be true for most long positions).

How are "bailouts" actually executed and who makes the decisions based on what? We can look back at TARP, but this time around it seems more generous due to an exogenous event.

Do these companies get free taxpayer cash/grants to just dump on their balance sheet? Is there some type of DD done by fed regulators beyond exec comp caps and buybacks? Or do politicians in Congress cherry pick winners and losers based on lobbying or donors? Does "saving" or "bailing out" a company include pushing them thru a Ch 11 restructure wiping out common equity, or truly bailing out speculators?

In the very first CARE bill (ph 3) we learned GOP had special carve outs for BA and GE that were opposed by both sides and removed. The 1st bill which likely had more of a corporate loan focus, was replaced by a version of the house bill that was mostly worker & supply chain focused (gov bond/equity stake).

I bet some companies are going to get unfairly hooked up and some companies are going to draw short straws, because of political/fed involvement....and probably poltically connected private equity influence. The only certain thing is the retail investor will be last to learn the terms.

#earnings for the week

$JPM $JNJ $RAD $BAC $WFC $UNH $CONN $C $APHA $FAST $ABT $GS $INFY $BBBY $TSM $BLK $PNC $CBSH $FRC $PGR $USB $AMRN $SLB $LAKE $ISRG $LOVE $BK $JBHT $KEY $SON $WIT $KSU $BLX $STT $GHG $HOMB $MUSA $RF $BMI $WAFD $CFG $SRC $MRTN

Earnings season will be the perfect excuse for the dump that is coming

the last of the bohemians said:

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Earnings season will be the perfect excuse for the dump that is coming

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Yep. Every bit of bad news that's been pending or pushed off will come out and guidance will be "well corona hit, so it wasn't our fault." It's a free pass to have ugly books for a quarter or two.

oldarmy1 said:

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If we have an up opening the $260 April 17 Puts should be $1.30 area. Definitely a worthwhile risk/reward, especially as a hedge.

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The lowest April 17 Put on SPY I see is for $274. Using TD Ameritrade. Is it the platform I'm using that doesn't let me see the $260?

HYC_AG said:

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oldarmy1 said:

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If we have an up opening the $260 April 17 Puts should be $1.30 area. Definitely a worthwhile risk/reward, especially as a hedge.

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The lowest April 17 Put on SPY I see is for $274. Using TD Ameritrade. Is it the platform I'm using that doesn't let me see the $260?

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You can expand the amount of strikes you see

La Bamba said:

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Really good video this week from Ciovacco. Compares the downtrends in '00 and '08 and the initial rallies that did not signal the bottom was in. A lot of information in this.

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Excellent video, thanks for sharing.

Every knee shall bow and every tongue shall confess

La Bamba said:

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Really good video this week from Ciovacco. Compares the downtrends in '00 and '08 and the initial rallies that did not signal the bottom was in. A lot of information in this.

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Geez, this was amazing information. Thank you for posting!

Two key takeaways from my perspective:

• Although it's in no way guaranteed, history suggests we will see a retest of the previous low in the coming weeks.
• Once we have a confirmed bottom, we can expect a significant stretch of market strength.

Something to keep in mind: Using historical comparisons as guidance for the current market's future is risky because the previous market crashes were not due to a global pandemic. This is a material difference in that until we have a vaccine, or develop herd resistance, the virus may prevent/hamper recoveries like we've experienced from previous crashes.

Btw, wise Stock Market Thread:
If you were going to buy SPY Puts at the open on Monday which are the most attractive?

Also, when in the past did we have 0% interest rates and 10 trillion of stimulus money.

Depends on the futures before the open.

Every knee shall bow and every tongue shall confess

I think it's 70-80% of options are traded before the expiration date as there is an intrinsic time value baked in to the option price that makes it more valuable than waiting til the last day

Buying a Put or a Call gives you the right to sell or purchase the underlying equity, respectively, at that strike price so long as the the strike price has been reached.

I am going to look at the SPY $260 4/17 and 4/24 in hopes that we see a pull back to $265 rather quickly. At which point I would sell the option.

Every knee shall bow and every tongue shall confess

Would you please elaborate?

It's pointless to become fixated on the price and strike of an option over the weekend because they'll probably change significantly depending on where the markets look to open up, especially with the vix this high.

Ragoo said:

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Buying a Put or a Call gives you the right to purchase the underlying equity at that strike price so long as the the strike price has been reached.

I am going to look at the SPY $260 4/17 and 4/24 in hopes that we see a pull back to $265 rather quickly. At which point I would sell the option.

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Buying a put gives you the right to sell the stock at the strike price, not buy it

FishrCoAg said:

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Ragoo said:

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Buying a Put or a Call gives you the right to purchase the underlying equity at that strike price so long as the the strike price has been reached.

I am going to look at the SPY $260 4/17 and 4/24 in hopes that we see a pull back to $265 rather quickly. At which point I would sell the option.

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Buying a put gives you the right to sell the stock at the strike price, not buy it

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My mistake, edited.

Two questions - I was 10 years in a somewhat similar industry and there are a lot of similarities but also a lot of differences -- but two general concepts that I wanted to kind of wrap my head around when it comes to the market:

1) If everyone knows we haven't hit bottom... Or in times when everyone knows the market is about to take off... How does that jive with the long-held belief that you can't time the market? I understand those that are day/swing trading aren't necessarily concerned about that, but it seems like as a long-term horizon investor that if everyone knows what the market is going to do, it's not likely to be the case?

2) Value side of things - much of the basic stuff I read tells how to look at financials of a stock and find where the value lies. With the technology that exists on Wall Street, if there was some sort of definitive or likely value to be found in the financials of a company's stock, wouldn't the big computers have squeezed all of the juice out of it already? If the #'s show a stock will likely be on the rise, is Average Joe really getting in there and getting value and the financial machines analyzing thousands of things a minute just isn't interested in the same likely profit?

We finally found the answer....you might have to zoom in below to learn what the future holds.

Proposition Joe said:

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1) If everyone knows we haven't hit bottom... Or in times when everyone knows the market is about to take off... How does that jive with the long-held belief that you can't time the market? I understand those that are day/swing trading aren't necessarily concerned about that, but it seems like as a long-term horizon investor that if everyone knows what the market is going to do, it's not likely to be the case?

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Because people don't really know. And they're wrong more often than they're right.

Chase just announced new mortgages will be required to have 20% down and 700 FICO score