Short-term BA options are attractively priced at the moment
The shares of Boeing Co (NYSE:BA) are down 1.4% to trade at $371.29 this morning, after a Wall Street Journal report indicated tensions between U.S. and European regulators could delay the 737 MAX return in 2020. More specifically, the European Union Aviation Safety Agency (EASA) isn't happy with the U.S. Federal Aviation Agency's (FAA) safety demonstrations on the airplane's flight-controlled computers.
Also weighing on Boeing is a lawsuit filed by the Southwest Airlines Pilots Association (SWAPA) which asserts BA misrepresented its 737 aircraft as safe. The suit also alleges that the grounding of the plan resulted in lost wages for Southwest (LUV) pilots.
BA is now set to snap a three-day winning streak, but the downside appears to be running out of steam near the shares' 180-day moving average, a trendline that has alternated between support and resistance in 2019. Year-to-date, Boeing stock is up 15%, but remains a ways off its March 1 record high of $445.95.
While call buying has been popular at the major exchanges in recent weeks, short-term options traders are unusually put-skewed right now. This is evidenced by BA's Schaeffer's put/call open interest ratio (SOIR) of 1.10, which ranks in the elevated 83rd annual percentile. This shows put open interest among options expiring within three months heavily outweighs call open interest.
Those currently buying premium on near-term BA options are in luck, considering the stock's Schaeffer's Volatility Index (SVI) of 26% ranks in the 21st annual percentile, pointing to relatively modest volatility expectations at the moment. Plus, the security has shown a tendency to make big moves in the past year, relative to what the options market had priced in, per its Schaeffer's Volatility Scorecard (SVS) of 92 (out of 100.)