Calls Hot as American Airlines Group Inc (AAL) Takes Flight

American Airlines Group Inc (NASDAQ:AAL) is popping today -- up 5.5% at $41.91-- after the company said it expects its third-quarter pre-tax profit margin to arrive at the higher end of previous guidance. The carrier also reported record September traffic. The positive price action has sparked a rush of call activity in the equity's options pits, with the contracts crossing at two times the average intraday pace.

Drilling down, eleventh-hour speculators are hoping today's upside continues through tonight's close. Specifically, it appears traders are buying to open AAL's weekly 10/9 42-strike calls, hoping the security settles north of $42 at tonight's close -- when the weekly series expires. AAL topped out at an intraday peak of $41.96 earlier.

More broadly speaking, it's been put buyers who have been active in AAL's options pits in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.50 ranks in the 85th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip.

Even more telling is AAL's Schaeffer's put/call open interest ratio (SOIR) of 0.79, which rests higher than all other comparable readings taken in the past year. Simply stated, short-term speculators are more put-heavy now toward AAL than they've been at any other point over the last 12 months.

In the front-month series -- which expires at next Friday's close -- peak put open interest of 10,453 contracts resides at AAL's October 36 strike. According to the ISE, CBOE, and PHLX, more than 5,200 new positions have been purchased since late August, meaning speculators have been expecting the equity to breach $36 in the near term. While American Airlines Group Inc (NASDAQ:AAL) hasn't traded south of this level since Aug. 24, the put buyers can rest easy knowing the most they stand to lose is the initial cash outlay.