Calls gaining altitude with $AAL

Option traders nearly doubled their money in American Airlines today.

On Dec. 26, Investitute’s proprietary systems flagged the purchase of 10,500 February $35 calls for $1.20 with as part of a bullish roll with shares at $30.82. Volume was far above the strike’s previous open interest, showing that this was a new position.

Those calls traded up to $2.25 today, almost twice their purchase price. The stock rose 18.53% in the same time period, illustrating the kind of leverage that options can achieve.

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 jumped 4.55% to $36.57 today. The airline carrier exceeded quarterly expectations and issued a positive outlook last week.