October 2, 2023

Boeing… Down but Not Out? : Top Trade Q1 2022

The woes for Boeing stock started about a year before the pandemic as the second 737 Max tragedy pulled the stock from all-time highs, above $437, down below $360. As the pandemic struck, shares fell over 74% hitting a low price of $89 in March of 2020.

Fast forward a year and a half and shares are now over $190, but far off the 2021 high of $278. Boeing is once again struggling this past month as fears of an Omicron-driven global slowdown could be a reality.

Outside of the macro picture the outlook for Boeing was looking better in recent financials as per share losses are now a fraction of what they were deep in the pandemic. Q3 loss per share was only 24% of losses seen in the same quarter last year as the world was recovering.

Boeing… Down but Not Out? :  Top Trade Q1 2022

Source: tastytrade

Time will tell if Omicron sends Boeing, along with the airline sector, lower again. That being said, I wouldn’t mind purchasing Boeing shares at lower prices, should they continue to fall. This means I’m comfortable selling a put option below the current price.

Boeing… Down but Not Out? :  Top Trade Q1 2022

By selling the 165 put, I am obligated to buy stock at 165, which would occur if the stock fell below that price. Otherwise, I keep the premium collected, which in this case is $335. I would likely look to buy back this put if it reached 50% of maximum profit, or $168. That would yield a 10% return on initial capital. Note that my buying power requirement increases if Boeing falls. If Boeing does drop and I’m forced to buy 100 shares at 165 my cost basis would $161.65. Given I’m hopeful Boeing will spend much of 2022 above $200, this is a risk I’m willing to take.

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