Hey Trader,

You know I pay extra close attention when I see a Big Money move from a trader who has already been right once …

And another time I take note is when I see Big Money piling in repeatedly to the same name.

So a triple-header on this airline stock definitely caught my attention …

Here’s what I saw.

American Airlines Group (Ticker: AAL) has been a frequent target of bearish attention in recent months …

And looking at its performance on the charts, it’s not overly shocking that Big Money is betting on (or hedging against!) downside for the airline.

The shares have traded choppily over the last few months, and look to be ultimately trending lower. While AAL did manage to recover from its mid-March low of $12.44, the shares have once agains reversed course in recent days, falling a disappointing 9.5% to close at $13.32 on Monday, and extending its losses on Tuesday by shedding 2.8% to close at $12.95.

Of course, these Big Money bears who made their move on Friday were probably delighted to see the sudden turn of events …

Well, maybe.

This first trader – who opened a July-dated 13/10-strike put spread – is probably quite pleased to see their spread already essentially in the money …

By purchasing 13,500 July 13-strike puts for $0.55, and selling the same number of 10-strike puts for $0.13, this trader will start to see their profits rack up once AAL breaks below the breakeven price of $12.58.

Although their profits are capped by the lower strike sold, they were able to lower their trade cost – and their risk – to $567,000, rather than paying the full $742,500 required to purchase the 13-strike puts outright.

This second trader may or may not be thrilled to see this turn of events with AAL …

These are likely catastrophe puts … put into place in the event that AAL goes bankrupt or suffers major, major issues (… like going bankrupt) before these puts expire in January 2024.

Rather than being an outright bet on AAL falling to a record low of $3, this trader may instead be a bond holder, or hold AAL shares, and they want to protect their holdings.

However, the fact that they’re willing to shell out $268,800 to hedge their bets isn’t necessarily a vote of confidence in AAL shares.

In fact, so many of these catastrophe puts have crossed the tape over the last six months or so, it certainly makes you wonder if these institutional investors might know something we don’t …

And lest you think the AAL bearishness was confined to last week …

Big Money was quick to strike on Monday, with one trader snapping up 20,000 November 15-strike puts for $3.30. 

With a breakeven of $11.70, it looks like this trader is betting on even more turbulence ahead for the airline stock.

So do these Big Money bettors know something we don’t?

Well, they often do.

They don’t make trades lightly …

AAL will be one to keep an eye on in the months … or years … ahead.

Your Only Option,

Mark Sebastian