An unusual put option trade was observed in American Airlines Group (AAL) on September 8th, 2021. The transaction involves 28,000 put options, each representing 100 shares of the airline company, with a strike price of $22 and an expiry date of December 17th, 2021, being purchased at a premium of $0.50.
This trade is considered unusual due to its size and timing, as it occurred during a period of relative stability in the airline industry, with AAL’s stock price hovering around $20 per share. The put options give the investor the right, but not the obligation, to sell AAL shares at the strike price of $22 before the expiry date. This strategy is often used by investors to hedge against potential downside risks in the stock market.
Some analysts have speculated that this trade could be a bet against the airline industry’s recovery as a result of the ongoing COVID-19 pandemic. Air travel demand has been gradually improving, but uncertainties remain regarding the potential impact of new variants and changes in government policies on the industry’s profitability.
Others have suggested that the trade could be related to a specific event or news that could negatively impact AAL’s stock price in the near future. For example, rumors regarding a potential merger or acquisition involving other major airlines could have a ripple effect on AAL’s stock price.
Whatever the motivation behind this trade may be, it serves as a reminder that large and unusual options trades can signal significant changes in investor sentiment and reveal valuable insights into the future direction of the stock market.