Boeing Stock Looks to Extend Strong Run of Blue-Chip Earnings

Blue-chip earnings continue to impress, with Dow stocks Caterpillar, 3M, and McDonald's guiding the index to record highs this morning. Now it's Boeing Co's (NYSE:BA) turn, with the aerospace giant scheduled to report earnings tomorrow morning. BA stock -- which just yesterday hit a record high of $265.98 -- is trading up 0.8% at $264.38, and considering its post-earnings history, it wouldn't be surprising to see the string of strong blue-chip earnings continue.

Last quarter, for instance, BA shares jumped 9.9% in the session after earnings. In fact, the equity has moved higher the day after the company reports in six of the last eight quarters. On average, the security has a single-day swing of 4.3% after earnings during that time, and this time around the options market is pricing in a 6% move in either direction.

Other options data suggests traders are taking a bullish stance ahead of tomorrow's event. For starters, Boeing has a 10-day call/put volume ratio of 1.25 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the top quartile of its annual range. This points to a stronger-than-normal demand for long calls over puts.

Meanwhile, the November 255 put saw the largest increase in open interest during the past 10 days, and it was followed by the weekly 10/27 240-, 245-, and 255-strike puts. However, data from the major options exchanges all of these strikes saw notable sell-to-open activity, so traders are betting on BA shares holding above these price points through Friday's close, when the weeklies expire. They may also be hoping for a post-earnings volatility crush.

However, options traders should note Boeing has shown a strong tendency to top volatility expectations over the past year. This is supported by its Schaeffer's Volatility Scorecard (SVS) of 93. In other words, the stock has consistently rewarded premium buyers in the last 52 weeks.

Elsewhere on Wall Street, BA stock still has a number of doubters in the brokerage crowd, even though it's added close to 93% during the past 12 months. Of the 17 analysts covering the security, eight still have tepid "hold" ratings in place. Post-earnings upgrades from this group could provide extra tailwinds for the shares.

And as we noted yesterday with Texas Instruments, Boeing's impressive run up the charts over the past year as at least partially been aided by a sharp decline in short interest. Yet, almost eight million shares remain sold short, and short interest continued to fall over the last two reporting periods, so this short-covering trend may not be over. This could be another source of buying power that drives BA to fresh record highs if earnings impress.