Atlas Air Worldwide Holdings(AAWW) has rallied over 25% in the past month and I think it continues to move much higher. AAWW is a global provider of outsourced aircraft and aviation operating services. Read more on AAWW’s profile: http://finance.yahoo.com/q/pr?s=AAWW+Profile. AAWW secured financing yesterday for the remaining delivery of six Boeing 747-8 Freighter Deliveries . That is spectacular news for investors!! Read more at Atlas Air Worldwide Completes Financing Arrangements for Remaining Six Boeing 747-8 Freighter DeliveriesBusiness Wire(Wed, Feb 1) If this stock breaks out above 50 shortly, I think it trades to the mid 60s in the next few months. Another major catalyst that might propel these shares much higher is AAWW’s earnings release on Feb 13, 2012. A blow out quarter for AAWW and any positive 2012 guidance by securing the financing on the remaining delivery of 6 Boeing Freighter’s will be great for both shareholders of the stock and investors long Call Stock Options. AAWW http://www.atlasair.com and it’s subsidiaries below:
What is the Options Trade on Atlas Air Worldwide Holdings(AAWW)?
Options Trade#1: For the short term trade into earnings of AAWW, I would think about purchasing the AAWW March 16, 2012 50.0 and 52.50 Strike Call Options. Attached is the March 16, 2012 expiration Put/ Call Options Chain courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=AAWW&m=2012-03. I would be a buyer of the $50 strike Call Options at $2.10 and the $52.50 strike Call Options at $1.25. For $2,000, I can purchase 16 Call Option contracts on AAWW March 16,2012 $52.50 strike Call Options plus trading fees. That will give me the option to buy 1,600 AAWW shares at $52.50 a share. If AAWW, blows out earnings this month and the stock trades to 60+ a share, this will be a very lucrative Options trade. Our $2,000 of capital invested on this Options play will be worth over $12,000 if the stock trades to $60 before expiration of the contracts. That would be awesome!! Keep in mind that if the stock closes below $52.50 at March expiration and AAWW has a bad quarterly earnings report on Feb 13, 2012, the Call Options may expire worthless. That is the high risk of Options…Hopefully, that will not be the case, but you know that you are risking the entire $2,000 plus trading fees on this Options trade. For the more conservative longer term investor, owning the shares of AAWW stock may be a great alternative to buying the higher risk Call Options. The growth story of AAWW’s revenue and earnings will be great over the next several years. Good luck AAWW Bulls!! This could be a Big Money Options trade for all of you Optionshoney lovers!!
Check out the 60 day technical chart on AAWW below courtesy of Fidelity Investments:
I discussed the big run up in Genworth Financial(GNW) over the past few weeks in a previous post on Optionshoney.com. The broader stock market indexes are all in slightly negative territory this afternoon as gold and silver continue to march higher!!! What is the play on GNW into earnings next week!? I am personally sticking with my bullish call on GNW and want to have long exposure going into earnings next week.
What is the Options play?
Options Trade#1: I would think about buying the GNW March 17, 2012 7 and 8 strike Call Options. Gnw shares are trading down around 4% today and I would be a buyer of these options at 1.08 and .50 cents a contract. I can purchase 10 contracts for a $1.08 ($1.08 x 100 shares per contract x 10 contracts=$1,080) and 20 contracts for .50 cents (.50 x 100 shares per contract x 20 contracts=$1,000) for a total cost of $2,080 plus trading fees. For a few thousand dollars, I will get long exposure to 3000 shares of GNW going into earnings next week. That is called leverage with purchasing Call Options. Buying 3000 shares of GNW stock today would cost me close to $23,100. If they beat the street and give any positive signals about a rapid decline in mortgage defaults or a housing recovery, this trade will be very profitable. If they miss and the stock tanks, I could lose a total of $2,080 plus fees on this trade. Remember options are very risky and extremely volatile. Please remember to consult your investment advisor before making any stock or options purchases.
Options Trade#2: I would also be a seller of the Feb 18, 2012 7 strike Put Options for .30 cents a contract. If I sell 20 contracts I will credit $600 to my brokerage account. Worst case scenario, I get exercised on the shares and I have to purchase 2000 shares of GNW at $7 for $14,000 plus fees. By selling the Put Options I will reduce the cost of buying the 2000 shares by the $600 credit to my brokerage account. Best case scenario, they blow out earnings next week and I keep the $600 without having to buy the shares…However, my long term outlook and price target on the stock is 17, so I like owning the stock at these levels. The book value of GNW shares is close to $28 a share…Good luck Longs!! Till next time on Optionshoney.com.
5 Year Chart on GNW courtesy of Fidelity Investments: