Boeing Stock Blitzed by Options Bears

Put have outpaced calls over the last two weeks

Deputy Editor
Jan 22, 2024 at 12:49 PM
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Blue chip Boeing Co (NYSE:BA) has been in hot water for the last few weeks, after the U.S. Federal Aviation Administration (FAA) made a critical recommendation following the Alaska Airlines (ALK) flight emergency. The FAA recommended airlines operating Boeing's 737-900ER model should "visually inspect mid-exit door plugs to ensure the door is properly secured.

In the time since a section of a Boeing 737 MAX jet blew out during a flight, put traders have ramped up their position on BA. The equity showed up on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume during the past 10 days. BA was not present on last week's list.

Per the chart below, 1,655,563 puts were exchanged compared to 1,543,289 calls in the same time period. The most popular contract by far was the weekly 1/19 200-strike put.

MAO Chart January 222024

A broader look shows puts were popular even before the most recent incident. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows Boeing stock's 50-day put/call volume ratio ranking in the elevated 95th annual percentile. In other words, option buyers have picked up BA puts over calls at a much faster-than-usual pace during the past 10 weeks.

It's worth noting that the security's Schaeffer's Volatility Scorecard (SVS) stands at 76 out of a possible 100. This means BA tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.

Prior to the Alaska Airlines debacle, Boeing stock was trading at more than two-year highs, peaking at $267.54 on Dec. 21 thanks to guidance higher from its 10-day moving average. Though the pullback bounced from the $200 level saved the sharp dip, the shares 10-day trendline has now stepped up as resistance. With three weeks of trading down in 2024, BA sports a more than 18% deficit.

BA Chart January 222024


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