Options Traders Think American Airline's Stock Will Soar

The travel sector has been slow to rebound despite the market generally thought to be forward-looking. On Thursday, however, the Transportation and Security Administration reported air travel surged to 1.72 million people -- up from 318,449 on the same day in 2020.

With Memorial Day weekend approaching, and CDC Director Rochelle Walensky expected to update travel guidance soon, the number of customers returning to the air will rise further.

With American Airlines Group Inc AAL set to benefit from further reduced restrictions and pent-up demand, a number of options traders bet over $800,000 its stock is headed higher.

See Also: How to Buy American Airlines Stock

The American Airlines Option Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 9:42 a.m., Friday a trader executed a call sweep, near the ask, of 1432 American Airlines options with a strike price of $23 expiring on July 16. The trade represented a $249,168 bullish bet for which the trader paid $1.74 per option contract.
• At 9:42 a.m., a trader executed a call sweep, near the ask, of 579 American Airlines options with a strike price of $23 expiring on July 16. The trade represented a $101,325 bullish bet for which the trader paid $1.75 per option contract.
• At 9:42 a.m., a trader executed a call sweep, near the ask, of 260 American Airlines options with a strike price of $21 expiring on May 28. The trade represented a $52,000 bullish bet for which the trader paid $2.00 per option contract.
• At 9:42 a.m., a trader executed a call sweep, near the ask, of 270 American Airlines options with a strike price of $23 expiring on July 16. The trade represented a $47,520 bullish bet for which the trader paid $1.76 per option contract.
• At 9:42 a.m., a trader executed a call sweep, at the ask, of 2029 American Airlines options with a strike price of $23 expiring on July 16. The trade represented a $357,104 bullish bet for which the trader paid $1.76 per option contract.

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

AAL Price Action: Shares of American Airlines were trading up 1.2% to $22.88.