Sightseers entering the Street should feast their eyes on Boeing Co (NYSE:BA). The aerospace kingpin offers one of the best looking trends in the market right now. Propelled by better-than-expected earnings, BA stock is up 30%-plus since late-October.
Its uptrend is one for the textbooks. The series of higher pivot highs and higher pivot lows has been uninterrupted for six months now. That’s some consistency, friends. Not surprisingly, all major moving averages from the 20-day to the 50-day are following price higher like loyal puppy dogs.
To gauge the momentum of BA stock’s trend, we can use the RSI indicator. Note how a higher swing high in the RSI accompanied the latest swing high in the stock.
Technician’s call this confirmation and it signals the uptrend of Boeing stock is increasing in momentum, which is impressive considering its already generous rise.
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On the volume front, we did witness a few higher volume down days during last week’s retreat. While low volume pullbacks are ideal, I wouldn’t be too worried about this development.
Considering the magnitude of BA’s recent price rise, it’s not surprising to see some bigger players ringing the register. Provided the stock holds the rising 50-day moving average, you should view this dip as a buying opportunity.
Score Profits With a BA Call Spread
Like the rest of the market, the implied volatility of Boeing stock options remains subdued. And that means derivatives can be snatched up on the cheap. Consider grabbing the May $180/$190 call spread for around $3.40.
The vertical spread consists of buying to open the $180 call while selling to open the $190 call. The initial cost of $3.40 represents the max risk and will be lost if Boeing shares sit below $180 at expiration.
The max reward is limited to the distance between strikes minus the cost, or $6.60, and will be captured if BA can rise above $190 by expiration.
With equities falling ahead of Wednesday’s FOMC meeting, I suggest waiting to pull the trigger on the trade until Boeing stock can rise above $180.50. This will provide some price confirmation that its next ascent has begun.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
