The COVID-19 pandemic led to a seismic shift in the stock market, with the travel sector among the hardest hit. While some may find the notion of profiting from others’ misfortunes uncomfortable, it’s important to recognize that shorting the market— whether through shorting stocks or buying put options—provided significant opportunities for those who anticipated the downturn. As travel stocks plummeted, those who made bearish bets could have seen substantial returns. This strategic approach of anticipating market declines allowed investors to profit as the pandemic took its toll on travel-related industries. For those who then saw the potential for recovery, investing in these beaten-down stocks during their lows offered remarkable upside potential as the world began to rebound.
Airlines
Shorting the Market:
American Airlines (AAL): Shorting AAL at its February 2020 high of $34.50 and covering when it fell to around $8.50 in March 2020 would have resulted in an impressive gain of about 75%. Put options on AAL during this period saw returns of over 300%, as the stock price dropped sharply
Delta Air Lines (DAL): Investors who shorted DAL at approximately $60 and covered at $20 in April 2020 would have realized a 67% gain. Put options on DAL achieved gains of around 500% due to the steep decline in stock price.
Southwest Airlines (LUV): Shorting LUV at $58 and covering at $32 in April 2020 would have yielded a 45% profit. Put options on LUV saw returns of about 250% as the stock fell.
JetBlue Airways (JBLU): Those who shorted JBLU at $20 and covered at $8 in April 2020 would have secured a 60% gain. Put options on JBLU demonstrated returns of up to 400%.
U.S. Global Jets ETF (JETS): Shorting JETS at $32 and covering at $12 would have resulted in a 63% profit. Put options on JETS performed exceptionally well, with returns exceeding 350%.
Recovery Period:
American Airlines (AAL): By March 2022, AAL had soared to approximately $19.60, marking a recovery of 130% from its lows.
Delta Air Lines (DAL): DAL’s stock rebounded to around $40 by March 2022, reflecting a 100% gain from its April 2020 lows.
Southwest Airlines (LUV): LUV’s stock climbed to about $52 by March 2022, representing a 62% recovery.
JetBlue Airways (JBLU): JBLU’s stock increased to $14 by March 2022, a 75% gain from its lows.
U.S. Global Jets ETF (JETS): JETS rose to $26 by March 2022, reflecting a 116% recovery.
Call options on these airlines showed significant performance, with some options delivering returns of up to 50% as the stocks climbed back from their lows.
Cruise Lines
Shorting the Market:
Carnival Corporation (CCL): Shorting CCL at $50 and covering at $8 in March 2020 would have produced a remarkable 84% gain. Put options on CCL saw returns of approximately 500%.
Royal Caribbean (RCL): Investors who shorted RCL at $135 and covered at $25 realized an 81% profit. Put options on RCL yielded up to 600%.
Norwegian Cruise Line Holdings (NCLH): Shorting NCLH at $60 and covering at $10 provided an 83% gain. Put options on NCLH showed returns of around 550%.
Recovery Period:
Carnival Corporation (CCL): By March 2022, CCL’s stock had recovered to about $20, marking a 150% increase from its lows.
Royal Caribbean (RCL): RCL’s stock rebounded to approximately $75 by March 2022, reflecting a 200% gain.
Norwegian Cruise Line Holdings (NCLH): NCLH climbed to about $25 by March 2022, a 150% recovery.
Call options on these cruise lines were exceptionally profitable, with RCL options showing a potential gain of 400% during the recovery period.
Hotels
Shorting the Market:
Wynn Resorts (WYNN): Shorting WYNN at $130 and covering at $60 in March 2020 would have resulted in a 54% profit. Put options on WYNN achieved returns of around 250%.
Hilton Worldwide Holdings (HLT): Investors who shorted HLT at $110 and covered at $50 realized a 55% gain. Put options on HLT provided returns of about 300%.
Marriott International (MAR): Shorting MAR at $150 and covering at $80 would have yielded a 47% profit. Put options on MAR saw returns of approximately 200%.
MGM Resorts International (MGM): Those who shorted MGM at $35 and covered at $10 realized a 71% gain. Put options on MGM demonstrated returns of up to 400%.
Recovery Period:
Wynn Resorts (WYNN): By March 2022, WYNN’s stock had rebounded to about $110, reflecting an 83% gain from its lows.
Hilton Worldwide Holdings (HLT): HLT’s stock rose to $95 by March 2022, a 90% recovery.
Marriott International (MAR): MAR’s stock climbed to approximately $140 by March 2022, a 75% gain.
MGM Resorts International (MGM): MGM’s stock increased to about $25 by March 2022, marking a 150% recovery.
Options on these stocks, particularly MAR, provided substantial returns, with some call options showing gains upwards of 300% during the recovery.
Ride-Sharing
Shorting the Market:
Uber Technologies (UBER): Shorting UBER at $35 and covering at $15 in March 2020 would have realized a 57% gain. Put options on UBER saw returns of approximately 200%.
Lyft (LYFT): Investors who shorted LYFT at $60 and covered at $15 achieved a 75% profit. Put options on LYFT provided returns of up to 300%.
Recovery Period:
Uber Technologies (UBER): By March 2022, UBER’s stock had climbed to around $35, marking a 133% recovery from its lows.
Lyft (LYFT): LYFT’s stock rose to about $30 by March 2022, a 100% gain from its lows.
Call options on UBER performed exceptionally well, with some achieving returns of over 250% during the recovery period.
Travel Booking Sites
Shorting the Market:
Expedia Group (EXPE): Shorting EXPE at $140 and covering at $40 in March 2020 would have yielded a 71% profit. Put options on EXPE saw returns of up to 400%.
MakeMyTrip (MMYT): Investors who shorted MMYT at $32 and covered at $10 realized a 69% gain. Put options on MMYT provided returns of approximately 350%.
Trip.com Group (TRIP): Shorting TRIP at $46 and covering at $18 would have resulted in a 61% profit. Put options on TRIP achieved returns of around 250%.
Recovery Period:
Expedia Group (EXPE): By March 2022, EXPE’s stock had risen to approximately $115, marking a 187% recovery from its lows.
MakeMyTrip (MMYT): MMYT climbed to around $24 by March 2022, reflecting a 140% gain.
Trip.com Group (TRIP): TRIP’s stock increased to $36 by March 2022, a 100% recovery.
Options on these booking sites showed impressive returns as well, with EXPE options demonstrating potential gains of over 300% during the recovery.
Conclusion
The COVID-19 pandemic created a volatile environment for travel stocks, leading to dramatic declines that presented opportunities for investors who anticipated the downturn. Those who shorted the market or bought put options saw significant profits as the prices of these stocks plummeted. Recognizing the potential for recovery in these travel stocks during their lows allowed for substantial gains as the world adapted to new norms and began to recover. The rebound of these stocks not only underscored the benefits of investing in sectors poised for recovery but also highlighted the importance of strategic foresight in navigating market cycles. For those who capitalized on the downturn and then invested in the recovery, the returns were exceptionally rewarding.
