How to trade airlines amid oil plunge

Despite a boost from cheap oil, airline stocks could soon lose altitude, some "Fast Money" traders said Tuesday.

"I think you've kind of hit peak airlines," said trader Dan Nathan.

Denver Airport United Airlines
Adam Jeffery | CNBC

Amid a dip in the price of oil, a key input cost, many airlines have beaten the broader market this year. Shares of Southwest Airlines, Delta Air Lines and JetBlue, among others, have climbed this year while the S&P 500 has lost about 1 percent.

But airline stocks "can only go down" from here, trader Karen Finerman contended. Nathan saw trouble ahead for United Continental, which has fallen 13 percent this year and has significant international exposure.

But JetBlue — which has soared 47 percent this year — has the best chance of upside in the airline sector, said trader Guy Adami. Spirit Airlines could also recover ahead after falling about 44 percent this year, said trader David Seaburg.


Dan Nathan

Long PFE buy-write, Long TWTR & Long March Risk Reversal, long IWM Dec Put Spread, Long UUP call spread, Long XLU Dec Call Spread, Long PYPL Jan Risk Reversal, Long M Jan16 52.50 / 62.50 call spread, Long INTC Dec Put Spread, Long XLF Dec put spread, Long NTAP risk reversal, GM Long Jan Put Butterfly, MCD Feb put spread

David Seaburg

Opinions expressed by David Seaburg are solely his own and do not reflect the views and opinions of Cowen Group, Inc.

Karen Finerman

Karen is long BAC, C, FL, GOOG, GOOGL, JPM, KORS, KORS call spreads, M, SEDG, URI, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, FL, FL calls, GOOG, GOOGL, JPM, KORS, LYV, M, MA, MOH, PLCE, URI, URI long puts, WFM, her firm is short IWM, MDY. Karen Finerman is on the board of GrafTech International.

Guy Adami

Guy Adami is long CELG, EXAS, INTC, Guy Adami's wife, Linda Snow, works at Merck.