American Airlines Stock Pops After Analyst Upgrade

Options traders' sentiment is changing

Deputy Editor
Jan 8, 2024 at 10:23 AM
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The shares of American Airlines Group Inc (NASDAQ:AAL) are up 5.3% at $14.32 this morning, brushing off Boeing's (BA) drama and flight cancellations following a bull note from Morgan Stanley. The firm upgraded AAL to "overweight" from "equal weight" on an improving balance sheet and impressive post-pandemic performance.

In addition to the upgrade, Bernstein raised its price target on the security to $20 from $19. The brokerage bunch was pessimistic towards the equity coming into today, with just three of 16 rating it a "strong buy," against 13 "hold" or worse recommendations. This leaves the door open for additional bull notes that could provide more tailwinds for AAL.

Bulls are all over the equity following the upgrade. Already, 26,000 calls have crossed the tape, which is double the intraday average volume. This denotes a shift in options traders' sentiment, as American Airlines stock's Schaeffer's put/call open interest ratio (SOIR) of 2.50 ranks higher than 98% of reading from the past 12 months -- a signal that short-term options traders have rarely been more bearish.

While the security is trading at its highest level since mid-December, the $14.40 area is still capping price action. However, today's surge has helped AAL move closer to its year-over-year breakeven mark.


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