$AAL bullish option trades gain altitude

It has taken just under two weeks for bullish option traders to see their call positions gain altitude in American Airlines (AAL).

On Nov. 26, Market Rebellion’s Unusual Activity Service detected the purchase of 9,700 December $15.50 calls for $0.33 to $0.36 with shares at $14.76. Volume was well above the strike’s previous open interest of just 1,094 contracts, showing that this was a new position.

Those calls traded for as much as $2.66 today, an 638.89% return, while the stock rose 22.43% in the same time period, underscoring how options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

AAL this session was last higher by 0.52% at $17.47.