Options Corner: BA Earnings Preview

Core Viewpoint - Boeing is experiencing a significant upward trend, with a 41% increase from year-ago levels, reaching two-year highs, indicating positive market sentiment and performance expectations [2]. Group 1: Stock Performance and Trends - Boeing's stock has shown a parabolic move over the last six to nine months, with a notable increase from previous years, although it remains below its all-time high of 446 reached in mid-2018 [3][4]. - The stock's recent performance includes a "golden cross" where the 50-day moving average has moved above the 200-day moving average, suggesting bullish momentum [5]. - The Relative Strength Index (RSI) is above 75, indicating that the stock is overbought on a technical basis, but positive news regarding new orders has contributed to this momentum [6]. Group 2: Market Expectations and Options Strategy - The options market is pricing in a potential move of approximately ±4.5%, equating to just over $11, indicating lower implied volatility at 13%, which is in the bottom 90% of the past 52 weeks [8]. - A neutral to bullish options strategy is suggested, involving a short $10 wide put vertical, which allows for profit even if the stock declines post-earnings [9][10]. - The proposed strategy includes selling an out-of-the-money put at a strike price of 242.5 and buying a put at 232.5, with a potential credit of approximately $2.30, and a break-even point at $240.20, which is about 4.6% below the current share price [10][11].