737 Buzz Draws Options Bulls to Booming Boeing

BA is set to snap a lengthy weekly losing streak

Aug 22, 2019 at 3:11 PM
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Boeing Co (NYSE:BA) stock is at the top of the Dow today, up 4.4% at $354.93, after Reuters reported the company is planning to resume manufacturing its grounded 737 MAX jets in February 2020 at a monthly rate of 52 planes -- building to a record 57 units per month by June -- though this depends on regulators clearing the aircraft to fly. Additionally, unconfirmed buzz is swirling the U.S. Federal Aviation Administration (FAA) is planning on testing how less-experienced pilots handle new software on the 737 MAX airliners.  

The upside has sparked heavier-than-usual activity in BA's options pits. With about an hour left in today's trading, roughly 122,000 calls and 61,000 puts are on the tape, double what's typically seen at this point. The weekly 8/23 series is hot, with the 350-strike, 355-strike, and 360-strike calls Boeing's three most active options. It looks like traders are buying to open these short-term calls, betting on more upside for the Dow stock through expiration at the close tomorrow, Aug. 23.

More broadly speaking, near-term options traders are more put-heavy than usual toward Boeing, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.12, which registers in the 90th annual percentile. The September 300 put is home to peak open interest of nearly 10,400 contracts, and data from the major options exchanges confirms buy-to-open activity here.

Today's pop has BA stock set to close above its 50-day moving average for the first time since a late-July post-earnings slide. The shares are also on track to snap a four-week losing streak -- their longest since mid-2018 -- and are now up 10% year-to-date.

ba stock daily price chart on aug 22


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