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Can You Profit From The Scariest Thing In Theaters This Fall? + Vic Wisemann’s Thoughts on: CAL, DAL, WYNN, LVS, CCL, RCL, RGC, CKEC

Vic Wisemann
InvestorsObserver
Featured Contributor

Schools are in session around the country at all levels, from kindergarten all the way through post doctoral studies. Students by the thousands will be working in close proximity for the first time in months. This is a breeding ground for infectious disease and the Swine Flu is the latest to make the rounds. 

Last month, Tulane University saw the effects of the Swine Flu up close. Members of Tulane’s football team returned from a morning practice complaining of sore throat, fever and fatigue. By the end of the day, Dr. Greg Stewart, a director of Tulane’s sports medicine program, said 18 players had contracted the flu. And it would only get worse.

Eight days later, 31 football players and 6 members of the volleyball team were believed to have come down with Swine Flu. Tulane canceled the football team’s Fan Day and kept the volleyball team home from its season opener in Nebraska.

While these were not big revenue events for the school, you can see the potential for a big money hit, should the school have to cancel a home football or basketball game later in the season.

Read on to see how to keep Swine Flu from making your portfolio sick.

As public health officials brace for the start of the academic year and an expected resurgence of Swine Flu, college locker rooms are turning out to be an early proving ground. Just as the football season is getting under way, Duke, Texas Christian and Alabama have reported cases of Swine Flu or of players experiencing flu-like symptoms.

Health experts say college athletes are perfect candidates for the Swine Flu, the virus known as H1N1, which in June was declared a global pandemic by the World Health Organization and which has infected more than one million Americans.

The strain tends to spread most quickly among young adults, who have not built an immunity to flu strains. Because the athletes share dorm rooms, cafeterias and sometimes unsanitary locker rooms, “it’s kind of an ideal situation for the flu,” said Artealia Gilliard, a spokeswoman for the Centers for Disease Control and Prevention. Although the virus spreads quickly among the young, Gilliard said, they typically contract mild cases and tend to get better without treatment.

According to a government report, Swine Flu still poses a serious health threat. In fact, nearly 2 million Americans could be hospitalized this coming winter with as many as 300,000 clogging intensive care units in heavily affected regions. That bleak assessment comes from the President's Council of Advisors on Science and Technology.

It’s not that the virus is more deadly than other flu strains, but rather that it is likely to infect more people than usual because it is a new strain against which few people have immunity, the White House said.

Although the report suggests vaccinations should mitigate the potential crisis, if left unchecked Swine Flu could wreak havoc.

Leisure activities will take the biggest hit as people will likely shy away from flying Continental Airlines, Inc. (CAL) or Delta Air Lines Inc. (DAL) in favor of driving or staying home altogether. Destination resorts from Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) will take a hit as well.

Back in May Carnival Cruise Lines (CCL), Royal Caribbean Cruises (RCL) and others suspended stops at Mexican ports. Many times, itineraries are being changed with stops in Mazatlan, Cancun and Puerto Vallarta being switched out for U.S. ports. As a result, fall and winter bookings are down for an industry already on the ropes from the global economic slowdown.

With people afraid to travel and schools potentially closed, many will stay closer to home for their entertainment options. Movie theaters from Regal Entertainment Group (RGC) and Carmike Cinemas Inc. (CKEC) could see an initial increase in traffic. As the flu spreads, however, and schools close, it is likely people will shy away from these dark enclosed rooms filled with coughing and sneezing people they don't know.

For a Swine Flu play, consider a January 15/17.50 Put Debit spread on RGC for a 2.20 Debit. The trade generates a 13.6% return and the stock would have to rise more than 20% to hurt the position.

The Swine Flu may not be as big a deal as we think right now and theaters may not see attendance drop by huge numbers. That is the beauty of the spread trade. RGC can rise to $14.99 at expiration and we still make our full profit on the trade.

As with all investing, losses are possible. Be sure any trade you enter fits into your personal goals and risk profile before you put your money at risk. Do your homework and try to have some fun.

If you have any additional thoughts, ideas or Swine Flu investing theories, please e-mail vwisemann@InvestorsObserver.com.