There's Plenty of Promise In This Rallying Reopening Stock

The stock looks primed for an upward shift in sentiment

Jun 2, 2021 at 2:00 PM

Shareholders of airline giant American Airlines Group Inc (NASDAQ:AAL) are preparing for their annual meeting, slated to take place on June 9. The equity recently broke through a technical downtrend, before finding support. And given the fact that the shares are up 100% year-over-year, with a 51.5% rise in 2021 to boot, now looks a great time to purchase AAL calls.

AAL jun 2

There also seems to be plenty of room for analyst sentiment to improve, as 11 of the 12 in coverage sport a "hold" or worse rating. An unwinding of pessimism from the brokerage bunch could put some wind at the stock's back. Meanwhile, short interest has more than doubled since the start of 2020, and the 84.50 million shares sold short represent a hefty 19% of the stock's available float.

AAL could also benefit from a shift in the options pits. The equity's Schaeffer's put/call open interest ratio (SOIR) of 1.29 stands higher than 84% of readings from the past year. In other words, short-term option traders have rarely been more put biased toward the security.

American Airlines stock boasts attractively priced premium at the moment, too. This is according to its Schaeffer's Volatility Index (SVI) of 43%, which stands higher than just 1% of all other readings over the last 12 months. Our recommended call has a leverage ratio of 5.1, and will double on a 19.9% jump in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this AAL commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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