Airline stocks are enjoying a sharp upswing today. The industry is recovering strongly as fuel prices tumble. And investors are also encouraged by the Delta (NYSE:DAL) and Northwest (NYSE:NWA) merger. But Andrew Snyder says this remains a high-risk sector for stock investors.

More from Today’s Financial News:

After nearly a decade of getting kicked around by the nation’s investors, airlines are finally starting to get some positive attention. More importantly, the barrens of the friendly skies are finally starting to look like profitable ventures.

Notice, however, that I “starting” to “look” like profitable ventures. As of last quarter, the only major airline to post a profit was AMR Corp. (NYSE:AMR), the owner of American Airlines. And its earnings were a mere pittance of total revenues.

All the rest, companies like Southwest Airlines (NYSE:LUV), Delta Air Lines (NYSE:DAL), and United Airlines (NYSE:UAUA), all lost significant

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In the battle for supremacy in the aircraft business, there are only two real players - Boeing Company (NYSE:BA) and Airbus (EPA:EAD).  These two companies compete for market share in commercial and military planes, with demand far exceeding each company’s manufacturing ability, and both have a long order backlog.  Some of Boeing’s customers, for example, will wait as long as five years before the planes they ordered are delivered.  And while they fill these orders, both companies must keep innovating.  As oil prices continue to soar, and airline companies like Delta and American Airlines struggle with tight margins, planes that fly faster, fit more passengers, and consume less fuel are at a premium.

And so each company has designed its own new super-plane - for Airbus, the A380, and for Boeing the 787 Dreamliner.  The Airbus plane has already debuted (its first flight was in October 2007),

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If you know what an iron condor is—which, if you’re reading this, you probably do—you also know that it isn’t the only options strategy out there. It’s worked very well for us, consistently providing close to 10% average monthly returns—but a lot of our subscribers have expressed an interest in, shall we say, a bit more variety. Sure, our bonus trades mix it up a little, but we thought it was time we started talking about other kinds of trades on a regular basis. That’s why we’re introducing Calendar Options. Condor’s Complement So what’s the best way to complement our iron condor positions? We like the idea of profiting no matter which direction the market takes from week to week, especially with so much economic uncertainty out there right now. So we’re going to stick with the delta-neutral theme for our ...

As you probably know Iron Condors are short Vega - which represents your positions sensitivity to shifts in implied volatility. In a relatively low volatility environment this can be troublesome when suddenly volatility spikes and your Iron Condors suffer as a result. So lets say you add some Vega to your portfolio by buying some 4 month calendars (ex: June/October) to hedge against an expected volatility pop. You now have a net Vega position of 100, your Delta is flat and you have some good Theta. The next day the VIX spikes up 2 points on some heavy selling. In theory you should get close to 200 bucks from the pop since you have 100 Vega and volatility went up 2 points. To your suprise your portfolio suffers just as if you had never even added the calendars - in fact it seems they made it worse. So what gives? ...

A while back I complained that several stocks I had been bearish about had gotten boosts from takeout offers. Namely, Diebold (DBD), Delta Airlines (DAL) and Yahoo! (YHOO). Delta stock finally broke down, and then agreed to a merger at much lower share prices. Today I look less stupid about Yahoo, though the stock is still up 5% from the date of my bearish article, compared to a 4.3% decline in the S&P 500. So that’s two down and one to go. Each reduction in my apparent stupidity is welcome. Disclosure: At time of publication, William Trent has no financial position in the companies mentioned in this article. Sponsor: Financial Education Everything you need to know about finance ...

Time to saddle up and fly west to San Francisco to meet with the development team of a very large online broker - I can say no more.Flying a MD-80? Why yes, I am, but it's with Delta - wish I knew how to play those odds in The OddsMaker.Outside of these meetings I'll be visiting some institutional clients but we plan to stay close to Menlo. If you'd like a little one-on-one assistance with Trade-Ideas or learn how we keep the ship afloat, please let me know via the comments section or at info@trade-ideas.com Subject: Menlo RoadTripIf there is a good response we'll set up a convenient time for everyone to meet. If it's just one or two that are interested we'll still meet or at the least schedule ...