The travel industry continues to struggle.
American Airlines Group Inc. (NASDAQ: AAL) announced that it would temporarily stop flight routes to 15 small cities across the country.
And while this may not seem like a red flag to many, in reality it speaks to the devastation that coronavirus continues to bring to the airline industry.
Now, the airline notes that it simply plans to halt service during the October schedule period, which runs from Oct. 7 to Nov. 3. But when you look at the fine print, there are no guarantees that service will ever return to these areas.
The affected cities are Del Rio, Texas; Dubuque, Iowa; Florence, S.C.; Greenville, N.C.; Huntington, W.Va.; Joplin, Missouri; Kalamazoo, Mich.; Lake Charles, La.; New Haven, Conn.; New Windsor, N.Y.; Roswell, N.M.; Sioux City, Iowa; Springfield, Ill.; Stillwater, Okla.; and Williamsport, Pa.
And these cities aren't the only locations being impacted. Many small city airports have seen airlines stop serving their areas altogether. This could create what many refer to as an "air travel desert," which will make it even more difficult for these areas to bring their economy back to life once the pandemic weakens.
On top of this, due to these shutdowns, American Airlines has notified 25,000 workers that they could be furloughed on Oct. 1.
With the travel industry's continuing struggle, we should keep our distance from it for the time being and look at these profitable stocks instead...
Where's the Money?
So instead of chasing an industry with no real "recovery plan," look at stocks in the sectors that are benefitting from the current state of the world, such as Zoom Video Communications Inc. (NASDAQ: ZM), Home Depot Inc. (NYSE: HD), and Target Corp. (NYSE: TGT).
Now, my trading tip this week is different from usual, but it's an important one. And it's a potent reminder of why options are such a viable trading tool.
When you purchase an option, you most likely will have profit targets. These targets will allow you to lock in a certain percentage of gains once your option hits a specific price. Simple, right?
But the great thing about options is that even before they hit that target, they're still profitable. This is because options have something called a mark to mark account. This means that as an option goes up in value from $1 to $1.20, even if you haven't sold the option, your account will be higher.
The same goes for the downside. If an option moves down, you'll notice your account moving down with it.
This is an important tip to keep in mind as you become more and more experienced with options trading - and it's essential to remember when deciding to take your profits or leave the trade on for more time.
Before You Go...
Even though many industries are still feeling lingering effects of lockdowns and forced closings, there are still reasons to feel optimistic about several opportunities.
Regardless of what the rest of the year brings, my Project 303 readers and I will continue to use the recommendations of my S.C.A.N. trading system...
Even in 2020's volatile markets, it's still been able to deliver plenty of double- and triple-digit winners.
And like I mentioned above, there are plenty more in our crosshairs.
For a much more three-dimensional view of the markets and to get on board before we take our next profits, click here now to gain access to Project 303.
About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.