Options Traders Make Bullish Bet on Airline

United Continental Holdings took off with upside option activity yesterday (Tuesday), as an early pullback in the price of oil gave airline stocks a lift.

(Update: since this writing, oil climbed on news of OPEC disarray.)

OptionMonster's tracking systems lit up with activity at the July 25 strike as nearly 8,800 calls were bought in the first two hours of the session. The calls, which went for prices ranging from $0.46 to $0.55, traded in large blocks at about 7 times the open interest.

UAL shares closed yesterday down 0.41 percent to $21.90. (See tickerfor today's quotes.) The call-buying took place as the stock quickly hit the session high of $22.48.

The morning activity came a day after the price of crude settled at its lowest level since May 23 amid concerns over recent economic reports. UAL then fell along with other airlines as oil made a comeback late yesterday.

The calls purchased yesterday will turn a profit if the stock rallies more than 16 percent by expiration on Friday, July 15. The company reports scheduled to report earnings results on the following Monday, July 18.

Overall calls in the name outnumbered puts by 4 to 1.


Pete Najarian has no positions in UAL.

Options Trading School:

Other Key Airline Stocks:

Delta Air Lines

US Airways LCC

Southwest Airlines




Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com.