10 Red Carpet Option Trades

Are Your Investments Going to Fail You This Year?

Alaska Air Group (ALK)

By Chris Johnson and Jon Lewis

“Up in the Air” is a Best Picture nominee starring George Clooney as a corporate downsizer who’s constantly flying across the country. It also describes
the airline sector, which has been on a tear of late. With GDP on the rise, oil prices steadying, and demand picking up, airlines have rallied.

Alaska Air Group (ALK), parent of Alaska Airlines and Horizon Air,
has posted profits for six straight years, including a 1,900% increase in 2009. Lower fuel costs and a reallocation of aircrafts to new markets that
increased load factors helped the bottom line, and ALK is well-positioned in 2010. In fact, the company was just initiated as a “buy” by an analyst
based on higher demand and improved pricing power.

With the stock flirting with three-year highs, look for a breakout to the highs of late 2006. That represents a move of 20%-25% from current levels.
Based on that move, the ALK July 40 Calls (ALK   100717C00040000) are
the right play under $2.50.

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