Option Trader Readjusts as American Airlines Group Inc (AAL) Challenges Resistance

by Celeste Taylor |

Published on Jan 11, 2017 at 12:54 PM
Updated on Jan 11, 2017 at 12:54 PM

American Airlines Group Inc (AAL) is higher with its sector peers, but continues to stare up at $50

American Airlines Group Inc (AAL) continues to challenge the round $50 level, prompting call writer to roll her position up and out

American Airlines Group Inc (NASDAQ:AAL) has joined sector peer United Continental Holdings Inc (NYSE:UAL) in today's broader airline rally, after the company issued an upbeat December traffic report and raised its fourth-quarter unit revenue estimate. Also boosting the airline stock is a preliminary report from The Wall Street Journal indicating the Justice Department will not pursue a collusion case against AAL and several of its sector peers (subscription required). Today's lift has AAL shares once again challenging a key level of resistance, prompting one option player to give their short call position a little more wiggle room.

Taking a quick look at AAL's technicals, the stock has been on a steady trek higher since bottoming near $25 in late July, up 96%. The shares also recently rebounded off their 50-day moving average, while their 80-day moving average contained several pullbacks in the third quarter of 2016. However, the shares are staring up at the round $50 level, which could potentially serve as stiff resistance. In fact, several attempts to overtake this mark -- which includes the stock hitting a Dec. 9 annual high of $50.64 -- have resulted in zero daily closes above it. In fact, AAL tapped an intraday peak of $49.90 earlier today, but the shares were last seen enjoying a slimmer 0.3% lead to trade at $48.64.

170111AAL

With American Airlines Group Inc (NASDAQ:AAL) trending higher above support and continuing to challenge resistance amid positive fundamental news, one short call trader has seemingly rolled her short call position up and out. According to data from the International Securities Exchange (ISE), one block of 993 February 50 calls was bought to close, while another block of 993 May 60 calls was simultaneously sold to open. If this is the case the trader is extending the shelf-life of her call-writing position and rolling up the strike to allow for more additional short-term upside. 

Schaeffer's Weekly Volatility Trader subscribers just made 121% GAINS on an American Airlines Group (AAL) straddle! Sign up now for a discounted 30-day trial.

LockerDome

Blog Search

MORE | MARKETstories


Dow Jones Industrial Average Dragged Down By GE; Nasdaq Streak Snapped
The COMP halted its longest winning streak in two years, but enjoyed a third straight weekly win
Analyst: This Pharmaceutical Stock Could Rally 40%
Ford stock is lower after the company filed a petition to avoid a recall
Options Traders Triple Their Money on Stanley Black & Decker
SWK stock has been exploring all-time highs since we recommended calls

Partnercenter


TRADING SERVICES | FEATUREDproducts


By MG 2016
In March of 2016, I was introduced to Expiration Week Countdown.  The results are better than words!
Options trading made simple.
Schaeffer's Investment Research, Inc. is dedicated to providing subscribers advantages in options trading and investing.  Our independent market research services create profitable opportunities for investors at every level.