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Negative Headlines Drive Put Players to The Boeing Company (BA)

Near-term put activity ramps up on the Boeing Company

by 1/14/2014 1:07 PM
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Option Brief: The Boeing Company (NYSE:BA) is off 0.9% today to hover at $139.43, after Japan Airlines reported smoke coming from a 787 aircraft's battery pack. Meanwhile, bearish traders have swarmed the stock's options pits, as approximately 26,000 puts have crossed the tape thus far -- more than four times the intraday norm. For comparison's sake, around 16,000 calls have switched hands.

Leading the pack is the January 2014 138 strike, where north of 6,100 puts have been exchanged -- the majority of them at the ask price, signaling buyer-driven activity. Since today's volume at this strike has surpassed current open interest levels, and implied volatility has ticked higher, it's probable that fresh long positions have been created here.

By purchasing the puts to open, the speculators are betting on the aerospace concern to fall south of the $138 mark by this Friday's close, when front-month options expire. However, even if the stock stays above the strike price over the next few days, the put buyers will simply give up the initial premium paid.

Today's drop notwithstanding, The Boeing Company (NYSE:BA) has been an outperformer on the technical front, boasting a 52-week gain of roughly 82%. As such, it's possible that some of the aforementioned traders are shareholders buying protective puts to guard against a deeper slide in the shares this week.


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