It's been a turbulent ride for the airlines of late, with the NYSE Airline Index losing more than 6 percent in just five trading sessions. The decline comes amid a selloff in crude oil, which is typically a bullish tailwind for airline companies whose biggest expense is fuel.
But despite crude's decline, airline stocks have been taken to the woodshed as traders fear an Ebola outbreak will cause travelers to cancel their trips for fear of catching the deadly virus.
In the past week alone, shares of American Airlines, , United, and JetBlue have lost a respective 12 percent, 9 percent, 7 percent, and 5 percent. Interestingly enough, though, as equity traders dump the stocks, options traders have been making some big contrary bets on the sector.
On Wednesday, one group of traders made a series of bullish bets on JetBlue.
Read MoreOptions traders bet big on this airline stock
And just Thursday, options traders made a huge bullish bet on American Airlines. Call volume outnumbered put volume by almost a 2-1 ratio in the airline, and in the biggest trade, one investor bought a block of 10,000 January 40-strike calls at $0.82 each. Since a call contract gives investors the right to buy a stock at a set price within a set time, this trade in particular is wagering that American Airline shares will be above $40.82 by the end of January, or roughly 30 percent higher than it is now.
"If you want to make a contrarian bet on one of these international carries, you probably want to do so through a defined bet structure," said Dan Nathan, an Options Action contributor and founder of riskreversal.com. "I actually went the other way," added Nathan. "I don't think it's going to take a whole heck of a lot more to get the airlines going the other way."
