Boeing Stock Takes Flight After Surprise Profit

BA puts have been growing in popularity lately

Digital Content Manager
Jul 28, 2021 at 9:32 AM
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Aerospace icon Boeing Co (NYSE:BA) stepped into the earnings confessional this morning and reported a surprise second-quarter profit of 40 cents per share -- much higher than Wall Street's estimates of an 83 cent per share loss. Thanks to 737 MAX jet deliveries speeding up and a rebound in travel across the globe, this marks the first time the company has posted a quarterly profit in roughly two years. In response, BA was up 5.6% at $234.65 at last check. 

Boeing stock has experienced volatility on the charts year-over-year, trading as low as $144 in October, and as high as $178 in March. Today's price action has BA reclaiming its descending 20-day moving average, a trendline that's alternated between support and resistance during the stock's roller-coaster run the last 12 months. In the last nine months, BA has added 43.2%.

Options traders have been targeting puts lately. This is per the security's 10-day put/call volume ratio of 0.45 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). So while calls still outnumber puts on an absolute basis, this ratio sits in the 83rd percentile of its annual range, indicating such a put skew is rare in the last 12 months.

Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR), which stands higher than all but 1% of readings from the last year. In other words, short-term options traders have rarely been more put-biased.  

Now could be a great time to speculate on Boeing stock's next move higher. The equity's Schaeffer's Volatility Index (SVI) of 35% sits in the 18th percentile of readings from the past year, indicating options players are pricing in low volatility expectations at the moment. 

Options could be a prudent strategy, considering the stock's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 70 out of 100. This means BA has exceeded option traders' volatility expectations during the past year -- a boon for premium buyers.

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