The Boeing Company (BA) Option Bulls Bet On a Breakout

The Boeing Company is headed south today despite an earnings beat

by Digital Content Group

Published on Oct 22, 2014 at 10:20 AM
Updated on Jun 24, 2020 at 10:16 AM

Despite reporting a third-quarter earnings beat and upping its full-year core earnings guidance, The Boeing Company (NYSE:BA) is sitting 1.7% lower this morning at $125.04 amid concerns over rising costs for its 787 Dreamliner. It was a different story yesterday, when the shares added 2.3% -- a move that prompted option bulls to target the plane manufacturer.

Looking more closely at Tuesday's options activity, overall volume doubled the typical single-session pace, and calls outnumbered puts 27,000 contracts to 21,000. BA's most active strike was the November 130 call, where close to 3,300 contracts changed hands -- mostly at the ask price, suggesting they were purchased. What's more, open interest rose here overnight, signaling fresh bullish bets.

By scooping up the long calls, the traders are wagering on BA to topple the round-number $130 level by the close on Friday, Nov. 21, when front-month options expire. However, the stock hasn't explored this territory since mid-July, with the area rebuffing several advances in recent months. Moreover, delta on the call has sunk to 0.22 from 0.32, following the post-earnings drop.

Taking a step back, The Boeing Company (NYSE:BA) is now sitting on a year-to-date deficit of 8.4%. Plus, the shares are facing potential overhead resistance in the form of their 120-day moving average, located at $127.82.


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