Boeing Co (BA) Short Interest Peaks as Options Bears Pile On

Short interest on Boeing Co (BA) is at an all-time high

by Alex Eppstein

Published on Apr 7, 2016 at 3:00 PM
Updated on Jun 24, 2020 at 10:16 AM

Short sellers have been busy lately -- really busy, in fact, with short interest on S&P 500 Index (SPX) stocks at its highest level in years. Drilling deeper, among the stocks with record short interest is Dow component Boeing Co (NYSE:BA), as roughly 26.8 million shares are sold short -- which would take 6.5 sessions to cover, at the stock's average daily volume. As we'll see below, pessimism toward BA extends to the options pits, as well.

During the past 10 weeks, options traders have bought to open 1.72 Boeing puts for every call across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The corresponding put/call volume ratio ranks just 4 percentage points from an annual peak, suggesting speculators have been picking up bearish bets over bullish at a near-extreme rate. Today, in fact, BA's most active option is the weekly 4/8 128-strike put, where traders are buying to open bearish bets in the hopes of extended downside through tomorrow's close.

Open interest levels are currently tilted in the favor of puts, as well. BA's Schaeffer's put/call open interest ratio (SOIR) checks in at 2.04, with puts more than doubling calls among options with a shelf-life of three months or less. Of particular significance is the fact that this reading ranks in the high 94th percentile of its annual range.

Despite the heightened expectations for a downside move in the Dow component, short-term options traders can buy premium on BA at a relative discount right now. The stock's Schaeffer's Volatility Index (SVI) of 25% sits in the bottom quartile of its 12-month range.

Technically speaking, things haven't been pretty for BA. The aerospace stock is off 0.6% today at $127.12 -- and down roughly 12% year-to-date. What's more, the shares have been facing pressure from their descending 20-week moving average.

On the fundamental front, Boeing Co (NYSE:BA) said it has received 17 new orders this week (including a request for four 747s), as of Tuesday's close, and delivered 226 total aircraft during the first quarter. However, CEO Dennis Mullenburg warned the company is on the brink of losing sales because of the U.S. Export-Import Bank's inability to reach a quorum.

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