Boeing Scandal Brings Option Bears

BA shares are pacing for their worst day since May

Oct 18, 2019 at 1:46 PM
facebook X logo linkedin

The shares of Boeing Co (NYSE:BA) are getting wrecked today, down 4.3% at $353.34, after Reuters reported that employees may have misled the Federal Aviation Administration (FAA) about a critical 737 MAX safety system. The planes have been grounded since a pair of fatal crashes earlier this year, and sources say the airline issue turned over instant messages from 2016 that the FAA finds "concerning." Against this backdrop -- and ahead of earnings next week -- BA put options are flying off the shelves this afternoon.

So far today, roughly 56,000 puts have crossed the tape, with a hefty chunk of that volume coming after the Reuters report. This volume has already more than doubled Boeing's average daily volume of around 26,000 puts traded.

Digging deeper, it appears some eleventh-hour bears are picking up the now in-the-money October 355 put -- the most active option so far -- ahead of expiration at the close tonight. Outside of the expiring October series, the November 300 and 275 puts are the most popular. New buyers of these options expect BA shares to sink beneath $300 and $275, respectively -- and to new year-to-date lows -- before options expiration on Friday, Nov. 15.

The November put buyers could be betting on -- or hedging against -- a post-earnings plunge for BA shares. The blue chip is slated to report its third-quarter figures next Wednesday, Oct. 23. After reporting earnings in July, the equity dropped 3.1% in the subsequent session.

After its last eight quarterly reports, BA stock has moved 3%, on average, regardless of direction. This time around, the options market is pricing in nearly twice that -- a 5.9% swing, specifically -- per at-the-money implied volatility data. The security sports a Schaeffer's Volatility Scorecard (SVS) of 84 out of a possible 100, meaning BA stock has tended to exceed options traders' volatility expectations over the past year.

Today's plummet is shaping up to be Boeing stock's worst session since mid-May. The equity is also on pace to breach its 120-day moving average -- a trendling that's acted as both support and resistance in 2019 -- for the first time in more than a month.

BA stock chart 1018




Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI