DailyPlay – Opening Trade (BA) – February 7, 2024

BA Bullish Opening Trade Signal

Investment Rationale

Boeing simply has had a terrible few years and just can’t seem to catch a break. And the incident on an Alaskan Airlines 737 Max 9 in January was simply rubbing salt into the wound. While the task of turning around Boeing requires a culture change, I see reasons to be bullish while many investors may be losing faith. I believe that we have an opportunity to add Boeing to a portfolio when the risk/reward looks very attractive. 

Technical Analysis

After breaking out to new multi-year highs above $240 at the end of last year, the stock came crashing down after the Jan 5 incident. However, now that over 90% of the grounded 737 Max 9’s have already returned to service, we have likely seen the bottom for BA at $200. Momentum has also turned positive and has the potential to fill its gap back up to $240. 

BA – Daily

Fundamental Analysis

With the expectation that BA will turn a profit in FY 2024 and revenue double-digit revenue growth, BA’s fundamental picture is starting to turn around since its 2018 decline. While BA is not out of the woods yet, it is likely that the 737 Max 9 will likely not require reengineering and return to service quickly. This would allow BA to focus on fixing its culture of safety, executing on its huge backlog, and returning to profitability. 

BA Trade Details

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish Debit Spread

Details: Buy to Open 2 Contracts April 19th $210/$235 Call Vertical Spreads @ $8.18 Debit per contract.

Total Risk: This trade has a max risk of $1,636 (2 Contracts x $818) based on a hypothetical $100,000 portfolio risking 2%. We suggest using 2% of your portfolio value and divide it by $818 to select the # contracts for your portfolio.

Counter Trend Signal: This is a bullish trade on a stock that is bearish and which found support.

1M/6M Trends: Bearish/Bearish

Relative Strength: 3/10

OptionsPlay Score: 109

Stop Loss: @ $4.10 Credit. (50% loss of the premium)

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Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that whenever there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that these prices are based on Tuesday’s closing prices. Should the underlying move significantly during the pre-market hours, we will likely adjust the strikes and prices to reflect a more accurate trade entry. 

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