Call prices take off with $AAL

It has taken barely a week for bullish option traders to double their money in American Airlines (AAL).

On Oct. 7, our tracking systems detected the purchase of 2,500 November $25 calls at the same time for $1.88 to $1.90 above open interest of 1,376 contracts with shares at $25.72. Market Rebellion co-founder Jon Najarian cited even more buying in the November $29 calls on CNBC’s “Halftime Report” today.

The November $25 calls traded for as much as $3.69 today, about twice their initial purchase price. The stock rose 10.26% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AAL is up 2.66% to $28.35 this afternoon. The carrier is scheduled to report earnings before the market opens on Oct. 24.