LUV is loving the summer vacation travel LONG

2023年7月10日

LUV has been in a persistent trend up for a couple of months after lackluster earnings were

reported in early May with another due on July 27th. The airports have been quite busy

with vacation travel and Southwest has been part of that action. On the 1H chart, price has

been supported by the line two standard deviations above the mean anchored VWAP which

shows persistent relative strength in a rise of over 25% over two months. Price above the

POC line of the volume profile is another sign of buyer dominance. The MACD indicator show

the lines in parallel and above a positive histogram. The relative volatility indicator shows

sufficient volatility to support momentum trading.

I will take a long trade going into earnings. I will do this with ten call options contracts

with a strike at $40 expiring on July 28th. On the last trading day, this contract had

a low of $ 0.36 and a high of $0.48 for a range of 33% in a single day. I expect similar

price action as the earnings date approaches. I expect to pay about $480 for ten contracts

and the profit expectation is 100% over the next 15 trading days.