Delta Air Lines ( DAL) has become an all-or-nothing investment scenario, so shareholders better buckle up because the ride only gets rockier as the carrier runs out of time to avoid a bankruptcy filing.

With every passing day, Wall Street brokerages say that Delta becomes a riskier stock to own, as it burns through cash and posts staggering losses. But on the other hand, Delta shares represent an even greater reward for investors with strong stomachs -- that is, if the company can get pilots to agree to wage cuts as part of a turnaround plan.

The mood swings and volatility in Delta's shares are likely to continue, according to analysts, until the carrier either files for Chapter 11 bankruptcy protection or can implement its once-delayed top-to-bottom reorganization of its business. On Tuesday, shares fell 47 cents, or 7.9%, to $5.47 one day after the shares rose 8% on second-quarter losses that were even worse than last year.

"Frankly, at this point, we believe Delta's stock trades as if it were an option," said William Greene, airline analyst at Morgan Stanley, in a research note. "Those who assume a long position in the stock are effectively buying an option that the company can assume an out-of-court restructuring and survive." (Morgan Stanley does and seeks to do business with the companies covered in research reports.)

If Delta's successful, then shares could see the same kind of tenfold increase experienced by AMR ( AMR), parent of American Airlines, in the wake of its out-of-court restructuring last year. But if Delta were to falter and seek out bankruptcy protection, shares will likely be rendered worthless, which is exactly what happened at US Airways ( UAIR) and UAL ( UALAQ.OB), parent of United Airlines.

The risk/reward is only compounded by the fact so many investors are betting the company will file for bankruptcy protection and that its stock is heading to zero. By the end of June, 57 million of Delta's 123 million shares had been shorted and, as a result, stock moves will be greatly exaggerated in both directions, causing some analysts to say Delta's too hot for most to handle.

"Shares have a binary outcome," said Greene. "As evidenced by Monday's trading patterns -- at one point the stock was up 15% intraday -- Delta's shares could gain $3 to $4 per share as easily as they could lose $3 to $4 per share. ... The possibility of a 'short squeeze' remains high, especially if oil prices fall sharply. We would not be involved in the shares today."

If you liked this article you might like

Check the Math on Air Fares

Check the Math on Air Fares

US Airways Circles as Pilots Bicker

US Airways Circles as Pilots Bicker

Departure of Delta's Song Unit Boss Stirs Questions

Departure of Delta's Song Unit Boss Stirs Questions

Boeing Boosts Jet Deliveries

Boeing Boosts Jet Deliveries

CEO Gilmartin Will Survive Recall

CEO Gilmartin Will Survive Recall