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

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

Jan 11, 2017 at 12:54 PM

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.

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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.

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