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implied volatility at its highest levels of the year, it's hard not to be interested in the somewhat troubled airline. While I think the company has issues ahead of it, I do not think AMR will go out of business anytime soon. I think this sell off is way over done and we might be at a point where it makes sense to step in to buy the stock.

As an options trader, I NEVER like to actually own the physical unless I absolutely have to. Rather than buying AMR, why not take advantage of the high IV by selling the September 4 puts and collecting a 49-day yield of over 8.5%? In order to lose, the stock would have to drop a full 10% from here, something I highly doubt. And if it does, I don't mind owning it. I could then sell this juicy IV in the form of calls against my long stock.

Trade: AMR trading $4.10, sell to open AMR September 4 puts at $0.35.

David: AMR is an airline stock that's been in a tailspin in 2011. At $4.09, shares are down some 46% year-to-date. And when you take a look at the company's quarterly report from earlier this month, you can see why this might be the case.

Stocks Under $5 Video: Seeking Value in Airlines

The company's loss of $0.85 a share was wider than expected. The entire industry is being plagued by stubbornly high fuel prices, but AMR especially has a lot of fat to cut on the expense side, relative to some of its low-fare competitors.

That said, I was intrigued earlier this week, when I saw that a director bought 20,000 shares of the airline on the open market. That's a big enough purchase to catch my eye, especially when the stock has been hit so hard.

There are several reasons why an insider might sell a stock, but there's only one reason why they'd buy it -- to make money. I believe that speculative traders might want to follow suit and play AMR for an oversold bounce back up toward $5.

At the time of publication, Mark Sebastian held no positions in the stocks or issues mentioned.