$AAL bearish option trades gain altitude

It has taken just four sessions for bearish option traders to see their put positions gain altitude in American Airlines (AAL).

On Feb. 28, Market Rebellion’s Unusual Option Activity Service found that 9,000 Weekly $15 puts, expiring Mar. 8, were bought for $0.22 to $0.23 with shares at $15.56. This was clearly fresh buying, as open interest in the contract was just 2,535 before the activity appeared.

Those puts traded up to $0.76 this session, a 230.43% return, while the stock fell 8.03% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

AAL this session was last lower by 3.27% at $14.32.