Unusual Options Activity In Boeing

in neoxian •  20 days ago  (edited)


They say the measure of a man’s character is not determined by how he handles his wins, but how he handles his failures.  And so I give a lot of credit to the CEO of Boeing, CEO Dennis Muilenburg.  He dealing with the aftermath of not one, but two fatal Boeing plane crashes that happen within a span of six months.


In March, an Ethiopian Airlines crashed killing 149 passengers and eight crew members on board shortly after takeoff. The incident was the second deadly crash of the new Boeing planes in less than five months. A Lion Air Boeing 737 MAX 8 plunged into the Java Sea shortly after taking off from Jakarta in October, killing all 189 people on board.

The culprit, Maneuvering Characteristics Augmentation System (MCAS), suspected of reacting to errant sensor data, the solution, a software update. Today, all 737MAX 8 planes around the world remain grounded.

The CEO thinks by the fourth quarter Boeing will have a software fix and the 737MAX 8 planes will be in service again.  There’s only one issue, while actually two.  Boeing is running out of time in maintaining investor confidence and they are running out of 737MAX8 storage room.  To maintain investor confidence, Boeing decided to cut the production rate from 52 to 42 737MAX8s.  But one solution created another problem.  As planes are being built, there is no place to store them.

And now Boeing has been forced to resort to some creative storage places, like the employee parking lot.

Although the CEO remains confident, the Smart Money begs to differ. Yesterday I noticed some bearish unusual option activity where the Smart Money bought almost 7500 of the October put options with a strike price at $275. 

This means the Smart Money thinks Boeing has more downside.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.


Published by Rolland Thomas
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The problem is the potential to lose future contracts and cancellations on existing ones because of the confidence of the product. In addition, if the US continues its hardline in negotiating trade agreements, some countries may push to avoid these large purchases from US companies like Boeing.

All great points, so I might just get my chance to short Boeing.

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The reputation is hard to regain. Once Maxes are flying again, they will probably be the safest planes in the air given the number of controls they went through. But will people want to fly on them?

It will definitely take some time, they just need to be consistent.

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