How One Trader Upped the Ante On The Boeing Company (BA)

Boeing Co (BA) calls were in high demand yesterday

Digital Content Group
Jan 30, 2015 at 10:02 AM
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Boeing Co (NYSE:BA) finished 5.8% higher yesterday -- and also touched an all-time high of $148.25 -- thanks to a rush of positive analyst attention following Wednesday morning's fourth-quarter earnings beat, and news that its 747-8 airliner was chosen to be the new model for Air Force One. Specifically, no fewer than six brokerage firms raised their price targets. These positive developments created a flurry of activity in the stock's options pits, with calls trading at four times normal intraday rates.

Looking at the data reveals one trader who appears to have sold to close a 2,168-contract block of February 138 calls and used the proceeds to fund a more ambitious bet, rolling her position up and out. Specifically, she apparently bought to open 4,405 March 150 calls. This trader expects yesterday's momentum to push BA over $150 by the close on Friday, March 20, when back-month contracts expire -- though the shares are down 1.7% this morning at $145.26.

Longer term, speculators have been more skeptical of BA. The security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.66 is higher than 90% of all readings taken in the past year.

On the other hand, as alluded to earlier, the brokerage firms following BA have taken a more bullish position. Of the 17 analysts covering the shares, 12 rate them a "strong buy," versus five "holds" and not a single "sell."

This positive outlook could be due in part to Boeing Co's (NYSE:BA) technical strength. Since the equity touched an annual low of $116.32 in October, it has seen a 25% increase, helped recently by a bounce from its 80-day moving average.

Daily Chart of BA Since  December 2014 with 40-week Moving Average
 

 

 

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