$Boeing(BA)$ is facing significant challenges as concerns over safety incidents, regulatory scrutiny, and manufacturing issues continue to mount. Recent developments have raised doubts about the company's ability to deliver on its operational and financial targets, leading to increased investor uncertainty. Here, I will share my technical analysis on BA’s potential downturn and analyze strategies for traders looking to capitalize on this trend.
BA Daily Chart
Technical analysis indicates that Boeing recently encountered resistance at around $196 and subsequently moved lower after failing to break through this key level. This rejection suggests underlying weakness in the stock and could signal further downside ahead. The support level is at 182 and a breakdown from here we should see the price trading at 165-174 range.
Potential Trades
Buying a 185 Put expiring June 21
Strategy: This trade involves purchasing a put option with a strike price of $185 and an expiration date of June 21.
Rationale: By buying a put option, traders profit from a decline in Boeing's stock price. The $185 strike price provides downside protection, allowing traders to benefit if BA's stock falls below this level by expiration.
Probability of Profit: Approximately 30%.
Put Spread (Buying 185 Put, Selling 165 Put) expiring June 21
Strategy: This strategy consists of buying a put option with a $185 strike price and simultaneously selling a put option with a $165 strike price, both expiring on June 21.
Rationale: The put spread limits potential losses while still allowing traders to profit from BA's downward movement. Selling the $165 put option generates income, offsetting the cost of buying the $185 put option.
Probability of Profit: Approximately 34%.
Credit Call Spread (Buying 210 Call, Selling 185 Call) expiring June 21
Strategy: This trade involves buying a call option with a $210 strike price and simultaneously selling a call option with a $185 strike price, both expiring on June 21.
Rationale: The credit call spread profits if Boeing's stock price remains below $185 by expiration. Selling the $185 call option generates income, offsetting the cost of buying the $210 call option.
Probability of Profit: Approximately 57%.
Bonus Idea
The bonus idea is provided as an additional trading strategy for traders who may have a more conservative risk appetite or prefer alternative options strategies. It offers a different approach to capitalizing on potential downward movement in Boeing's stock price while minimizing risk compared to the other suggested trades.
OTM Credit Call Spread (Buying 215 Call, Selling 210 Call) expiring June 21
Strategy: This additional trade involves buying a call option with a $215 strike price and simultaneously selling a call option with a $210 strike price, both expiring on June 21.
Rationale: The OTM credit call spread profits if BA's stock price remains below $210 by expiration. This trade offers a lower risk alternative for traders with a more conservative approach.
Probability of Profit: Approximately 80%.
In conclusion, Boeing's recent challenges and technical indicators suggest a potential downward trend in the stock's price. Traders can consider various options strategies to profit from or protect against this anticipated decline. However, it's essential to carefully assess risk and reward and adapt strategies based on changing market conditions and developments in Boeing's business.
Share your perspectives!
How do you think ongoing safety concerns and regulatory scrutiny will impact Boeing's long-term competitive position in the aerospace industry?
Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Always conduct your research before making investment decisions.
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