The CEO of Continental Airlines Inc. (CAL), Larry Kellner, stated recently he would consider a merger with another airline. There has been recent speculation by business and stock analysts about a possible merger between Continental and United Airlines (UAL). The speculation of a merger between Continental and United has heated up somewhat since US Airways (LCC) made an unsolicited bid for Delta Airlines (Formerly: DAL) in mid-November. Many analysts believe the US Airways merger attempt could set off a round of US carrier consolidation. Mergers could create a leaner competitive field and be a shot in the arm for the long troubled sector.
Continental Airlines Inc., based in Houston Texas, transports passengers, cargo and mail throughout the United States. At the end of last year its fleet consisted of over 350 large jets and over 250 regional airplanes. The airline flies to over 130 domestic and over 120 international destinations.A deal between United and Continental might make good sense. Continental Airlines has a robust fleet of Boeing (BA) aircraft, a nice match with United’s heavy reliance on Boeing.
Additionally, the merger would allow United to expand its footprint without a costly investment in new infrastructure. Continental showed up on today’s list of PowerOptions’ five star rated stocks. This report is provided free with a subscription to the PowerOptions website. The report returned two attractive covered calls stock options positions for Continental Airlines Inc.
| Continental Airlines Inc. (CAL) (51 days) ($40.64) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Expiration/Strike | Opt. Bid |
%Dnsd. Prot |
%If Unch. |
%If Asgnd |
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| CALAI | 07 JAN 45.0 | $1.65 | 4.10% | 4.20% | 15.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CALAH | 07 JAN 40.0 | $3.70 | 9.10% | 8.30% | 8.30% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The January $45 covered call is an out-of-the-money [OTM] covered calls stock options position, giving tolerable downside protection of 4.1% with a large potential profit of 15.4%, in only 51 days. The $40 covered calls stock options position is in-the-money [ITM], offering greater downside protection of 9.1% yet a respectable 8.3% potential profit. In light of the volatile nature of the airline industry it may be wise to opt for greater downside protection. So we consider the covered calls stock options position with a $40 strike price as the more attractive of the two positions.
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[tags]Larry Kellner, Delta Airlines, Houston, Texas, BA, Boeing Co., CAL, Continental Airlines Inc., LCC, US Airways Group Inc., covered call investment strategy, investment strategy, iron condor, option income, poweroptions, stock option trading, stock options[/tags]