Boeing Drops on Delivery Update as Traders Eye Earnings
Boeing Drops on Delivery Update as Traders Eye Earnings
Stock’s volatility attracts options traders
- Boeing reports a slowdown in Q1 airplane deliveries.
- Trouble at the airline producer drags prices near October 2023 lows.
- A high implied volatility rank of 92.0 make options selling strategies attractive.
Boeing (BA) updated delivery numbers today for its jets during the first quarter. The report didn’t offer its stock any help, and it remains down nearly 2% on the day to trade near its March lows. A break below that level would threaten the October 2023 low at 176.25.
The report unveiled the lowest number of aircraft delivered in a quarter since 2021, although March deliveries did see a small improvement, rising from 27 in January and February to 29 in March. Boeing delivered 64 airplanes in March 2023. The quarterly slowdown comes amid regulatory and reputational problems at the airplane manufacturer.
Earlier this year U.S. regulators limited production of 737 jets to 38 per month, and Boeing executives have said they are intentionally slowing production to address ongoing issues. That will more than likely delay BA’s previously stated financial goals, although the stock price already reflects most of that impact.
The slowdown in manufacturing has even hit airlines, which have been forced to cut routes and alter plans around operations. While the impact has so far been minimal, traders will be listening to earnings from Delta and other airline operators in the coming weeks to get a better feel for the issues. Boeing will report first-quarter fiscal results on Wednesday, April 24.
Trading Boeing near the lows
Boeing approached its October 2023 low after today’s negative headlines. The stock is trading with an implied volatility rank (IVR) of 92.0, making it an attractive prospect for those looking to sell premium. If you believe Boeing can defend against the October 2023 low and survive earnings, selling a put spread at the 175/170 May 17 strike offers a probability of profit (POP) of 58% and a max profit of +190 and a max loss of -310. This was essentially the same hypothetical trade I highlighted back in March.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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