Airline stocks are struggling amid slowing travel demand
American Airlines Group Inc (NASDAQ:AAL) stock is seeing unusual options activity today, with 165,000 calls traded so far -- 5 times the volume typically seen at this point -- compared to 48,000 puts. The April 12 call, where positions are currently being opened, is the most popular contract by far.
This penchant for bullish bets has been the norm over the past 10 weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 50-day put/call volume ratio of 2.54 that sits higher than 81% of annual readings.
AAL is down 4.3% to trade at $10.98 at last glance, as the airline sector struggles amid slowing travel demand, and Canadians cancel U.S. travel plans in response to tariffs. Shares are on track for their fifth-straight daily loss, and earlier slipped to its lowest level since October. The security is consolidating below the 200-day moving average, after breaking below it last week, and carries a 26.3% year-to-date deficit.
Short sellers are firmly in control, with the 50.87 million shares sold short now making up 7.9% of the stock's available float. Meanwhile, 13 of the 20 analysts in coverage still call AAL a "buy" or better, indicating a round of downgrades could pressure the shares even lower.
Options look like a good way to weigh in on AAL, as it has tended to outperform options traders' volatility expectations during the past year. This is per its Schaeffer’s Volatility Scorecard (SVS) of 75 out of 100.