Though the bigger picture of the equities market remains muddled, Tuesday’s 3% surge in the S&P 500 Index was sufficient to shift the short-term sentiment in favor of the bulls.

The coming days will reveal whether or not the rally was a one-hit wonder or the beginning of a sustained upswing.  Traders looking for additional bullish exposure should be on the lookout for stocks providing low-risk/high-potential-reward opportunities.

Of the major indexes, the Dow Jones Industrial Average seems to have held up the best in recent months.  With Tuesday’s run, it established itself back above the pivotal 200-day moving average.

A brief scan of the 30 Dow components reveals an appealing setup in Boeing (NYSE:BA).  The last month of sideways congestion has formed a clean base that may serve as a launching pad for yet more upside in this popular aerospace company.

One simple approach to exploit a continuation in the uptrend is purchasing a vertical call spread.  To provide sufficient time for the expected move to play out, traders could use February options.  In structuring the position, you could buy to open the BA Feb 70 Calls while selling to open the BA Feb 75 Calls for a net debit around $2.80.

That way, it doesn’t matter what you pay/collect for the individual “legs” of the spread, as long as your net price paid is around $2.80 or better.

The maximum loss is limited to the $280 ($2.80 x 100) paid at trade inception and will be incurred if BA resides below $70 at February expiration.  The reward is limited to the distance between strikes ($75 – $70 = $5) minus the net debit ($5 – $2.80 = $2.20), and will be captured if BA resides above $75 at expiration.

As evident in the chart below, BA has a short-term resistance level around $72.75.  Traders should consider waiting for a break of this level before pulling the trigger on the trade.

Source:  MachTrader

At the time of this writing Tyler Craig had no positions on BA.