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I think it’s time to admit that Donald Trump’s tariff initiative isn’t an investor’s best friend. Perhaps a mortal enemy is too kind a description of the mass chaos unleashed on North America and, frankly, the world.
As I write this before the markets open Friday, the S&P 500 futures are slightly positive, a sign the week could end upbeat. But to do that, investors need a good jobs report and encouraging words from Jerome Powell, Federal Reserve Chair.
I’m skeptical but never say never.
As we enter the week’s final day of trading, the S&P 500 is off 3.6%, the Nasdaq-100 -3.9%, and most importantly, as it relates to this article, the Dow (-2.9%). Boeing, one of the 30 Dow components, is off 9.2%.
Yesterday, Boeing (BA) CEO Kelly Ortberg held an all-hands-on-deck company-wide meeting to explain what has to change at the aircraft manufacturer. For once, it appears that frontline workers aren’t being scapegoated for management’s failure.
One word encapsulates the company’s problems: Culture. It sucks. I think investors have known that for some time. Its shares are down 64% from the stock’s all-time high of $446.01 in March 2019.
Yesterday, Boeing had seven unusually active put options, one of which could be a lucrative income opportunity. However, between the trade war and a broken corporate culture, you’ve got to be pretty darn risk tolerant to sell the put in question.
Here’s why.
Have an excellent weekend!
Boeing’s Unusual Options Activity for Thursday
On Thursday, 6.89 million Boeing shares were traded, in line with the 30-day average. The options volume was 101,406, slightly higher than the 30-day average.
As for unusual options activity, BA had seven puts and five calls, out of 2,000. For this article, I’m focusing on the puts, specifically, the April 4 $155 strike.
While the April 4 put had a decent Vol/OI ratio of 6.30, it didn’t have too many big trades, the largest being 228 around 9:37 yesterday morning. The largest single trade for Boeing puts of any expiration date was 1,500 for the March 7 (today) $175 strike. The good news: the net trade sentiment for Boeing options was generally bullish at $7.06 million.
Using the trade price of $4.90, if you sold the put, the annualized return would be 37.8% [$4.90 trade price / $160.70 share price * 365 / 29]. That’s not too shabby.
However, if it drops below $150.1, you’ll lose money, as the put buyer will exercise their right to sell you the 100 shares at $155. I’d be more comfortable with a bit more breathing room.
The $155 is 2.16% OTM (out of the money). The $145 put is 8.48% OTM. It has a 76.81% OTM probability, compared to a 57.65% OTM probability for the $155. The $145 bid price at close was $2.39 for an annualized return of 18.9%. That’s nothing to sneeze at either.
The only problem with the $145 is the volume—it was 13 yesterday with an open interest of just 76. It will be difficult, but not impossible, to buy one or more at a reasonable price.
Should You Do It?
One strategy I like is selling puts to get a better entry point for a long position. In this situation, the income is less important than the ultimate price you pay for 100 shares.
Of course, because selling puts involves unlimited potential losses, you must be tolerant of the risk and willing to take an initial paper loss on your trade, believing that it will become an unrealized gain over time. You’ve got to be bullish.
My biggest problem with Boeing is that it’s tough to fix once a company is broken, at least not to the point where investors are willing to forget all of the mistakes made to get to where Boeing is today.
Fortunately, Boeing's chief rival, Airbus (EADSY), hasn’t fully capitalized on this period of weakness for the maker of the 737 Max. In 2024, Airbus deliveries were 2.3 times higher than those of Boeing. Cirium Aviation Analytics estimates Airbus's advantage will drop to 1.5 times that of Boeing.
I’m unsure if that’s enough to risk buying shares at $155.
In addition, the Chinese state-owned manufacturer Comac is developing the C929m, a widebody aircraft that should be able to compete with its larger rivals in Asia and beyond. However, that competition isn’t imminent and will not affect the near-term movement of BA stock.
According to MarketWatch, 58% of the 33 analysts who cover Boeing rate it a Buy, compared to 77% for Airbus.
Boeing stock hit a 52-week low of $137.03 in November. Given potential supply and logistics issues regarding tariffs, never mind the culture issues, this is not a business that you want to take a flyer on.
However, the $145 put should be okay over the next four weeks if you are an aggressive investor.
Good luck.
