A Regression trend is a statistical method used to identify the underlying trend of a stock's price movement over a specified time period. It involves fitting a line to the data points of the stock's historical prices, which helps to determine if the stock is in an upward or downward trend. On this JETS chart, the regression trend channel starts with March 2021 highs and extends down to January 2023 lows. JETS has had a difficult time breaking and staying above the 200 day moving avg until just recently in January 2023.
The U.S. Global Jets ETF (JETS) provides investors access to the global airline industry, including airline operators and manufacturers from all over the world. Its top holdings are: AAL, UAL, DAL, LUV, ALGT, ALK. The chart also shows numerous -22% to -28% declines in the past year. So is JETS due for another -20 to -30% correction?
On Friday, someone bought the JETS 4/21 19P 15,000x .65. This is a "cheap" put, but in large size ~$975K position on a .35 Delta. On one hand, this could be a hedge, for a fund manager who is long the Airlines or Market...on the other hand, if JETS is due for a correction, on a risk-reward basis, I would want to see JETS get below $17 with a $16.70 target, which is -15% below where it is currently trading and back within our regression channel and mean reversion.
Mean reversion states that stock prices tend to move back to their average or mean over time. The mean is typically calculated using the stock's historical prices, and the idea is that stock prices tend to deviate from their mean only temporarily, and eventually return to their average. In practice, the two concepts can be combined to form a trading strategy that involves buying stocks that are undervalued (below their mean) and selling stocks that are overvalued (above their mean).
The U.S. Global Jets ETF (JETS) provides investors access to the global airline industry, including airline operators and manufacturers from all over the world. Its top holdings are: AAL, UAL, DAL, LUV, ALGT, ALK. The chart also shows numerous -22% to -28% declines in the past year. So is JETS due for another -20 to -30% correction?
On Friday, someone bought the JETS 4/21 19P 15,000x .65. This is a "cheap" put, but in large size ~$975K position on a .35 Delta. On one hand, this could be a hedge, for a fund manager who is long the Airlines or Market...on the other hand, if JETS is due for a correction, on a risk-reward basis, I would want to see JETS get below $17 with a $16.70 target, which is -15% below where it is currently trading and back within our regression channel and mean reversion.
Mean reversion states that stock prices tend to move back to their average or mean over time. The mean is typically calculated using the stock's historical prices, and the idea is that stock prices tend to deviate from their mean only temporarily, and eventually return to their average. In practice, the two concepts can be combined to form a trading strategy that involves buying stocks that are undervalued (below their mean) and selling stocks that are overvalued (above their mean).
Comment:
Taking profits here +200% ; also rolled some to 4/21 17P