$AAL puts land bears profits

It has taken just over two weeks for bearish option traders to double their money in American Airlines (AAL).

On Jun. 9, our unusual tracking systems detected the purchase of 11,300 July $16 puts for $2.35 to $2.39 above open interest of 2,632 contracts with shares at $18.07.

Those puts traded for as much as $5.20 today, twice their purchase prices. The stock descended 32.43% 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 $12.18, filling the air carrier’s gap higher on a daily chart from Jun. 4, before taking off higher to close the session up 1.00% at $13.17.