Options Bulls Pounce as Boeing Takes Off

Some Boeing traders are looking ahead to next week's earnings report

Boeing Co (NYSE:BA) is the best Dow stock this afternoon, after the aerospace giant said its grounded 737 MAX planes are expected to begin flying again in the fourth quarter. BA also indicated it will ramp up production of the aircraft by next year, and compensation to airlines as a result of delayed 737 MAX deliveries will translate into a $4.9 billion after-tax charge.

At last check, BA stock is up 4.6% at $377.67, headed toward back-to-back weekly wins. Since bouncing from the $350 region early last week -- home to a 61.8% Fibonacci retracement of Boeing's December low to March high -- the shares have added 8.3%, and have regained a foothold atop their 200-day moving average. However, the security is struggling near its 120-day trendline, which contained a late-June rally attempt.

Options traders are positioned for more upside through tonight's close. Amid accelerated volume -- around 107,500 calls and 64,000 puts have traded so far, three times what's typically seen -- buy-to-open activity has been detected at the July 370, 375, 377.50, and 380 calls, BA's four most active options this afternoon. Looking further out, bulls may be purchasing new positions at the weekly 7/26 375- and 380-strike calls, which expire next Friday, July 26.

The lifetime of these weekly call options encompasses Boeing's second-quarter earnings report, which is scheduled for release before the market opens next Wednesday, July 24. The stock has closed higher the day after earnings in six of the past eight quarters, including the last three in a row. On average, the shares have moved 3.8% in the subsequent session, regardless of direction, roughly in line with what Trade-Alert currently pegs as the implied earnings deviation.