Boeing Stock Falls Further But Options Traders See Rebound Ahead

Reopening stocks such as Boeing Co BA have taken a big hit recently as the ramp up of the COVID-19 vaccine roll out has been marred by an increased spread of the Delta variant.

On July 13, Boeing’s stock broke bearish from a triangle it had been trading in since January.

During Friday’s trading session Boeing lost support of the 200-day simple moving average and printed a bearish marubozu candlestick indicating lower prices were likely to come on Monday.

On Friday afternoon at least one Boeing options traders predicted further downside ahead and purchased puts totaling $309,000. The trader bought 300 of the bearish puts at $10.30 a piece with a strike price of $215 and a Sept. 17 expiry.

On Monday, options traders had a sentiment change and began selling their puts and buying calls. Monday’s price action left a gap above, between about $211 and $217, and because gaps fill 90% of the time these traders felt comfortable betting Boeing’s stock will rise up to fill the gap.

But not before Boeing stock gapped down over 3% lower before falling 3% intraday.

In total the options traders purchased over $1.34 million call contracts.

See Also: Why Boeing Is A Bad Trade, But A Good Investment

Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price. A sweeper pays market price for the call or put option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.

These types of option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.

The Boeing Trades: Below is a look at the notable options alerts, courtesy of Benzinga Pro:

• At 10:39 a.m., a trader executed a call sweep near the ask of 240 Boeing options with a strike price of $210 expiring on July 23. The trade represented a $60,000 bullish bet for which the trader paid $2.50 per option contract.
• At 11:33 a.m., a trader executed a call sweep near the ask of 879 Boeing options with a strike price of $200 expiring on July 23. The trade represented a $791,100 bullish bet for which the trader paid $9 per option contract.
• At 11:45 a.m., a trader executed a call sweep near the ask of 300 Boeing options with a strike price of $220 expiring on July 30. The trade represented a $66,900 bullish bet for which the trader paid $2.23 per option contract.
• At 12:45 p.m., a trader executed a call sweep near the ask of 900 Boeing options with a strike price of $240 expiring on Oct. 15. The trade represented a $423,000 bullish bet for which the trader paid $4.70 per option contract.

BA Price Action: Shares of Boeing closed down 4.94% at $206.99.