American Airlines shares were having their busiest day in history on Tuesday after the company's parent filed for bankruptcy, even taking account of 16 mandatory trading halts due to the volatility.

Shares of AMR Corp, the parent of American Airlines, dropped 80 percent to 32 cents, with more than 125 million shares traded after the company's bankruptcy. It ranked as second-most active early on Tuesday afternoon behind Bank of America.

The stock was halted repeatedly in the early hours of trading due to volatility. A stock in the Russell 1000 index that moves more than 10 percent in a five-minute period is halted under circuit breaker rules adopted by U.S. exchanges after the May 2010 flash crash.

With a stock at such a low price as AMR, it only takes a move of a few cents to hit the 10 percent threshold that triggers a halt.

The quirk here is that AMR is still a member of the Russell 1000 where the 10 percent level holds. Shares not in that index traded at $1 a share or less are not halted until they move by 50 percent, according to the Securities and Exchange Commission.

While stock volume in AMR is off the charts, the option volume is relatively muted, on track for 40,000 contracts by the close, or about twice the recent average daily volume.

Going into this event, total open interest in AMR options was 762,000 contracts, but most of that is struck well above the 34 cent current spot price, Trade Alert data showed.

Most traders see no reason to trade options on a 34 cent stock that is in bankruptcy, said Henry Schwartz, president of options analytics firm Trade Alert in New York.

Flow was very strong earlier this month, especially at the $3 strike put in January 2013 and May 2012 expirations, but now that the event has happened, the opportunity to trade is gone.

AMR filed for bankruptcy due to soaring fuel prices and lower travel demand. Analysts at Citigroup cut their ratings to sell and the price target to zero on the stock.

NYSE Regulation Inc. said it is reviewing the continued listing status of the stock.

(Reporting by Caroline Valetkevitch, additional reporting by Edward Krudy in New York and Doris Frankel in Chicago; Editing by David Gaffen and Kenneth Barry)

American Airlines