Market News

January 10, 2017  Tue 11:23 AM CT

Traders are looking for American Airlines to rally.

Our monitor systems show that 15,000 January 40 calls were sold for $8.10 while 15,000 January 2018 42 calls were purchased for $10.50. Volume was below open interest in the near-term contracts, indicating that a bullish position was rolled forward by a year for $2.40.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

AAL is up 2.02 percent to $48.03 in afternoon trading and is up 25 percent in the last three months. The carrier reported bearish results on Oct. 20 and is expected to announce its next quarterly numbers in pre-market hours on Jan. 27.

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