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The Boeing Company's (BA) Good News Doesn't Scare Off Bears

Weekly 75 put is most popular among BA traders

by 2/20/2013 2:02 PM
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Today's bevy of good news surrounding The Boeing Company (NYSE:BA - 75.68) hasn't deterred some investors looking for the aircraft maker to sink by the end of the week.

The most active strike today on BA is the weekly 2/22 75-strike put, which has seen nearly 2,500 contracts cross so far today. Some of these traded at the ask price, and implied volatility has ticked higher today, indicating the creation of some new positions. These puts have traded at a volume-weighted average price (VWAP) of $0.18, meaning BA shares need to close at $74.82 on Friday (when the options expire) for investors to break even -- anything below that marks a profit. Otherwise, all these traders would lose is the premium paid.

BA may have found a solution to the battery problem that has grounded the 50-plane fleet of its new Dreamliner 787 model, meaning the planes could get back in the air by April. In addition, the company reported it was close to a new labor deal with one of its largest unions. That sent BA shares up 1.3% today, helping keep the equity barely above the breakeven point for the year. Before the Dreamliner grounding, BA had been treading water for the past few months, but it had recovered from its annual low of $66.82 hit on June 5.

Sentiment toward the stock has been mixed over the short and long term. The Schaeffer's put/call open interest ratio (SOIR) for BA is 0.74 for options that expire in the next three months, and that ranks in the lowest 16% of similar readings taken in the last 12 months -- meaning that traders are relatively more call-oriented now than in the past year (although some of the call open interest may have been sold to open). But on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BA's 50-day put/call volume ratio is at 0.66. While that shows that more calls are being purchased to open (100 for every 66 puts, specifically), that ranking is in the highest 5% among the past year's readings -- indicating a more bearish attitude over the last 50 days.


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