How This Airline Stock is Faring Ahead of Earnings

Options look attractively priced at the moment

Digital Content Manager
Jan 24, 2023 at 2:07 PM
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It's almost time for another travel giant to report earnings, with American Airlines Group Inc (NASDAQ:AAL) set to announce fourth-quarter results before the open on Thursday, Jan. 26. Ahead of the event, analysts are anticipating profits $1.14 per share. 

The security has recently found its footing near the $16 level, following a pullback from a rally that came just shy of the $18 region. The shares earlier this month overcame long-term resistance from the 320-day moving average, however, and have added more than 27% since the start of 2023
AAL 320 Day.
American Airlines stock doesn't have the best track record when it comes to post-earnings reactions, though, finishing five of its last eight next-day sessions lower, which includes a 7.4% dip in July. In the past two years, the shares averaged a move of 4.4%, regardless of direction, but the options pits are pricing in a bigger-than-usual swing of 6.9% this time.
The brokerage bunch is bearish on AAL, with 13 of the 14 analysts in coverage rating it a "hold" or worse. Short sellers have been piling on as well, with short interest up 9.3% in the last reporting period. The 89.81 million shares sold short make up for 14% of the stock's available float.
Bearish bets have been more popular than usual in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 1.39 that stands in the 97th percentile of its annual range.
Attractively priced premiums suggest now may be an opportune time to bet on AAL's next move. This per the stock's Schaeffer's Volatility Index (SVI) of 47%, which sits in the low 4th percentile of readings from the past year.


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