$AAL put prices take flight

It has taken just three sessions for bearish option traders to double their money in American Airlines (AAL).

On the morning of Dec. 9, our unusual tracking systems detected the purchase of 15,500 December $17.50 puts for $0.59 to $0.68 above open interest of 3,372 contracts with shares at $18.55.

Those puts traded for as much as $1.23 today, nearly twice the average of their purchase prices. The stock descended 9.33% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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 was down to an intraday low of $16.81, before closing on the session down 5.23% at $17.05. Deutsche Bank downgraded the air carrier to Hold from Buy this morning, while raising its price target for the shares to $20 from $18.