Novice Trade: American Airlines

Yes, the VIX is getting thwacked. But there are some sectors where IV is especially low. Most notably in transportation stocks. The cost of owning options in American Airlines (AAL) is the cheapest in the last two years. Meanwhile, VIX is nowhere near those levels. If I was actively trading a book of stocks I would be trying to buy strangles in AAL and the like.

Be that as it is, I think the market is still due for some sort of breather and would be looking to play AAL to back off. I can buy the April 40 puts for about $1.00. That is not expensive given the time and the level. I would be looking to dump these at $1.80-$2.00 and be out at $0.50....8 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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