Boeing Stock Could Be Ready to Bounce

BA shares are on sale right now, if recent history is any guide

Managing Editor
Oct 15, 2018 at 2:28 PM
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Dow name Boeing Co (NYSE:BA) has seen heavy options trading in recent weeks, landing on Schaeffer's Senior Quantitative Analyst Rocky White's list of 20 stocks that have attracted the highest amount of weekly options volume during the past 10 trading days. Names highlighted yellow are new to the list. BA is fresh off its worst week since February 2016, but there could be a silver lining, if one technical indicator holds true once more. 

MAO Oct 15

Last week's pullback means BA is now within one standard deviation of its 160-day moving average, after a lengthy stretch above this trendline. In the past two years, there have been six other signals of this kind, after which Boeing shares were up by an average of 3.3% a month later and positive 83% of the time, per data from White.

At last check, Boeing stock was up 0.2% at $360.40, so a one-month rally of similar proportions would have the stock more than halving its losses from last week. Overall, BA has still added 22% in 2018, and nabbed a record high of $394.28 on Oct. 3. 


Digging into options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows BA calls have been incredibly popular lately. This is shown in its 10-day call/put volume ratio of 2.16, which ranks 4 percentage points from an annual high. This means that not only has call buying more than doubled put buying during the past two weeks of trading, but the appetite for bullish bets has been healthier than usual.

Digging deeper, the weekly 11/9 390-and 395-strike calls saw the highest increases in open interest during this time frame, with almost 15,000 options added between the two. Data suggests a potential long call spread is in play, with buy-to-open activity at the 390-strike and sell-to-open activity at the 395-strike last week. 

Whatever the case, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.80 ranks in the 6th percentile of its 12-month range. This indicates that short-term speculators are more call-heavy than usual toward the stock.

Regardless of motive, the good news for options traders is that BA sports a Schaeffer's Volatility Scorecard (SVS) of 82 out of 100, which shows the stock has tended to make larger-than-expected moves on the charts compared to what the options market had priced in. In simpler terms, it may be an opportune time to speculate with Boeing options.


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