Blue-chip aerospace concern The Boeing Company
(NYSE:BA) ascended to a four-year high of $81.95 earlier today, attracting a crop of fresh option bulls. As of 11:20 a.m. ET, the equity had seen around 27,000 calls cross the tape -- about six times its average intraday call activity, and close to twice the number of BA puts exchanged.
Garnering the most attention is the April 82.50 call, which has seen roughly 5,000 contracts change hands on open interest of just 2,001 contracts, pointing to a slew of new initiations. Plus, 83% of the calls crossed on the ask side, suggesting they were bought.
By purchasing the calls to open, the buyers expect BA to muscle north of $82.50 within the next several weeks. More specifically, the calls traded at a volume-weighted average price (VWAP) of $1.50, meaning the investors will begin to profit if BA conquers the $84 marker (strike price plus VWAP) -- a feat not accomplished since mid-2008. Should the equity remain south of the strike, though, the buyers' maximum risk is the initial premium paid for the calls.
However, this morning's preference for bullish bets marks a change of pace in the options arena. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.71 ranks in the 87th percentile of its annual range, suggesting options players have bought to open BA puts over calls at a faster-than-usual clip during the past couple of weeks.
Sparking today's appetite for calls were signs of regulatory headway on the horizon, with the FAA expected to soon clear flight tests
for repaired models of the 787 Dreamliner. At last check, the shares of BA have trimmed their gain to a still-respectable 3.4%, with the security lingering in the $81.71 neighborhood.
This article by Andrea Kramer was originally published on Schaeffer's Investment Research.
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