Trader hedging American Airlines
American Airlines has pulled back from 14-year highs in the last month, and one large trade is positioning for further declines.
optionMONSTER's Depth Charge system shows that a block of 6,500 August 38 puts was sold for $0.68 against previous open interest of more than 10,000 contracts. At the same time, 6,500 November 37 puts were purchased for $2.30 in volume far above open interest of 1,158, so that is a new position.
This could be a diagonal spread , but the trader is far more likely closing the August position and rolling it out three months to a strike that is $1 lower. This is also probably a hedge against long shares, rather than an outright bearish play. (See our Education section)
AAL is down fractionally to $39.48 in midday trading. The airline operator climbed to $44.88 on June 23--its highest price since May 2000--but has been falling since reporting earnings last week.
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