AMR Rally Fuels Bullish Options Activity

AMR – AMR Corp. – Shares of the operator of American Airlines rallied as much as 3.765% this morning to secure an intraday high of $6.89 perhaps on news the International Air Transport Association raised its 2010 global industry profit forecast to $8.9 billion from $2.5 billion. The IATA also upped its profit forecast for airlines in North America in 2011 to $3.5 billion from $1.9 billion. The IATA’s positive revision spurred near-term bullish options activity on AMR Corp. in early trading. Investors expecting the price of the underlying stock to rise ahead of expiration next month bought approximately 5,200 calls at the October $7.0 strike for an average premium of $0.25 a-pop. Call buyers make money if AMR’s shares increase another 5.2% over today’s high of $6.89 to surpass the average breakeven price of $7.25 by expiration day. Investors picking up October $7.0 strike calls today are adding to the long call open interest currently generated at that strike.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

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