Option Players Still Bearish on Boeing (BA)

03/23/2010 12:01 am EST


Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

The Boeing Co. (BA) jumped nearly 2% in morning trading after the shares were boosted from "underperform" to "outperform" by Oppenheimer. The brokerage firm cited the company's plans to accelerate production and its historically high backlog for commercial planes for the upgrade.

Before today's upgrade, Wall Street was relatively skeptical of the shares. According to Zacks, the stock had earned 11 "buy" or better ratings, 13 "holds," and two "strong sells. Any additional upgrades from this group could add some buying pressure to the shares.

Meanwhile, options players are pessimistic toward the company. The Schaeffer's put/call open interest ratio comes in at 1.44, as put open interest outnumbers call open interest among options scheduled to expire in less than three months. This ratio is also higher than 79% of all those taken during the past 12 months. In other words, short-term options players have been more pessimistically aligned toward the shares only 21% of the time during the past 12 months.

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Furthermore, the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have seen an increase in put trading. During the past 50 trading sessions, 1.06 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 64% of all those taken during the past 12 months, pointing to a growing pessimism.

By Jocelyn Drake, contributor, Schaeffer’s Trading Floor Blog

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