I can quadruple my money by betting on this airline: Trader

Airline stocks have been grounded this summer, but one trader is looking to quadruple his money on a stock he says is about to take off.

Delta Air Lines has traded in a range since its shares fell sharply leading into August. But Andrew Keene of AlphaShark believes the technicals are showing a turnaround for the struggling carrier.

"I think the short-term bottom is in here, and I think we can make a move higher," he said Wednesday on CNBC's "Trading Nation."

The bottom Keene refers to sits at $36 on Delta's daily chart. Not only is the stock rising off of the $36 level once again, but Delta is also trading right around its 50-day moving average. Keene also looks at the company's previous high around $41 to determine that in the short term, the stock could move back up to the same level again.

"I use the options market to find a measured move target to the upside," he said. "They're implying that Delta can move $5 between December expiration."

Keene wants to buy the December 40-strike calls and sell the December 41-strike calls for a total cost of 25 cents per share, or $25 per options contract. If Delta closes at or above $41 by December expiration, that call spread will be worth $100 on the trade, or four times his initial premium.

Delta shares were down almost 2 percent in Wednesday trading, falling as low as $36.02. The Dow Jones U.S. airlines index is down about 19 percent this year.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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