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Unusual Option Opportunity In American Airlines

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According to Delta Derivatives, shares of American Airlines Group Inc (NASDAQ: AAL) saw unusually high options activity on Wednesday. Notably, the February 50 calls traded 13,056 contracts versus only 141 open interest. With the average price of the trade being done at 2.25, this represents a total dollar outlay of $2.937,600.

In addition to the increased volume, the implied volatility on the February 50 calls rose, moving from 35.78 on Tuesday's close to 37.70 on the close Wednesday, an increase of 5.5 percent. While shares closed higher on the day by $0.22, the February 50 calls rose more than the stock, rising $0.24. This set up a covered call opportunity, buying shares of American Airlines and selling a February 50 call for each 100 shares purchased.

Delta Derivatives noted this captures a 1.66 percent edge and positions bullishly along with the large call buyer. The February 50 calls have a delta of 33, while the covered call position has a more bullish delta of 67.

Shares closed at $42.96, with the February 50 call strike 16.38 percent higher than the current share price.

Disclosure: The author has no position in AAL at the time of publishing.

Posted-In: Long Ideas Options Markets Trading Ideas


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