Boeing Stock Stumbles on Potential 737 Max Production Pull

The stock is still clinging to year-to-date gains

Deputy Editor
Dec 16, 2019 at 9:21 AM
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Aircraft manufacturer and Dow name Boeing Co (NYSE:BA) has landed itself in the headlines once again. This time, on news that the company is considering either cutting down on production of its 737 Max planes, or scrapping production altogether. The decision follows last week's Federal Aviation Administration (FAA) comments that it would not approve the currently grounded plane's return to service before next year. An official announcement could be expected as soon as this afternoon. 

The shares are down 4% at $327.87 in response, trading back near their mid-October lows. In fact, Boeing has had a miserable month so far -- now down roughly 10.4%, following a November rally that lost steam at the round $375 region. The 10-day moving average has been adding pressure on the charts, too, with recent runups capped by the trendline. For the year, BA is still clinging to a slight gain. 

A surprising amount of analysts are still holding out hope, with seven in coverage giving the blue chip a "strong buy" rating, and eight calling it a "hold." What's more, the consensus 12-month target price of $374.45 hasn't been touched by Boeing since mid-November. 

The options pits have remained quite bullish too. BA sports a 50-day call/put volume ratio of 1.57, which ranks in the 84th percentile of its annual range. This means traders are picking up calls at a much quicker than usual clip.

For those looking to invest in Boeing's next move, options look good right now. The blue chip's Schaeffer's volatility index (SVI) of 24% is in the 16th percentile of its annual range, meaning options players are pricing in relatively low volatility expectations right now. 

 

 

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