The Boeing Company (NYSE:BA) has my attention today as we begin our options trading activities this week. Boeing declined 1.56% last Friday to close down at $149.60 and the decline suggests that investors are probably jittery about the prospects of the company as it is set to deliver its first quarter (Q1 2015) earnings on April 22.
For those that are not very familiar with Boeing, the simply one of the biggest aerospace companies in the world right now. According to Google Finance, Boeing with a market capitalization of $104.70B operates in five segments: Commercial Airplanes, Boeing Military Aircraft (BMA), Network & Space Systems (N&SS), Global Services & Support (GS&S) and Boeing Capital Corporation (BCC).
Why We Are Looking At Boeing Today
The main reason I am attracted to Boeing despite the weakness that was recorded last Friday is the impressive bullish ascent of the company in the year-to-date period. In the year-to-date period, the shares of Boeing have gained 15.09% to outperform the gains of 1.85% in the Dow Jones Industrial Average.
For an improved perspective on where Boeing is coming from, the chart above shows how the shares of Boeing have traded in the last one year. From the chart, you will observe that the shares of Boeing have traded within a range in the last 8 months of 2014. That trading range is the area marked with a $120 support and a $130 resistance key level.
You will then observe that the stock had a decent rally in late2015 (first blue arrow) and that rally came at the heels of news that Boeing has increased its dividend and share repurchase program. Boeing reported that the dividend payable to its shareholders was to be increased by 25% and the company raised its share repurchase program to $12 billion to outperform even the biggest analysts’ expectations. The dividend hike and increase in share buyback naturally pleased investors and they responded by sending the shares of Boeing higher.
Not long after the first ascent, Boeing experienced another impressive bullish ascent (second blue arrow) that saw the stock rising to a $158.83 high. The second rally in Boeing was precipitated by solid fourth quarter (Q4 2015) earnings that the company reported on January 28. In the fourth quarter, Boeing reported earnings of $2.31 to beat the consensus estimate of $2.07 by 11.59%.
How to Trade BA Options
The shares of Boeing have entered another channel as seen in the shaded area. The new trading range of the stock has a $150 support and a $155 resistance. I posit that Boeing has a good shot at beating estimates and rising higher when it reports its first quarter earnings on Wednesday. For one, Boeing has beaten estimates by an average of 13.72% in the last four quarters and the stock has consistently beaten estimates in 19 out of the last 20 quarters.
I recommend buying BA call options and you will do well to consider buying the BA Aug 2015 150.000 call (BA150821C00150000) at an asking price of $6.50.
— Daily Option Alerts