Trade Update $BA Merci Buckets, Closing July Put Spread for Quick Gains

Posted by

TradeUpdateJune24th,2013at12:24pm?

WithBAdown6%inaweeksinceplacingthisneartermbearishbet,Iamgoingtotakemyprofitsandmoveonasthestockcouldfindsomesupportatthe50daymovingaveragelessthanapercentfromcurrentlevels?

ThetradewastofadetheParisAirShowexcitementandthatsexactlywhatwedid。

Action:BA($96。

97)SoldtocloseJuly100/95PutSpreadat2。

50fora1。

50profit。

Aswehavebeenstayinginourcommentarywearelookingtotradehere,wearenotlookingtohithome-runsandcatchthebigone,wearelookingtohitsinglesanddoublesandinoneweekIwouldconsiderthistradetobeasolidstandupdouble?

Ondowndaysliketodaywearetakingoffashortortwo,spreadingoutrightputsandlookingtomaybeaddanoversoldname。

[hr]

OriginalPostJune17th,2013?

NewTrade$BA:IfHistoryIsAGuide,TheTradeIstoFadeTheParisAirShow?

WhenIwrotethishypotheticaltradeuponFriday,myapprehensionatthetimewastoopresstheshortonadowndayinthemarket,andasthestockhadreversed1。

5%fromthemorningsandthealltimehighs?

WithBAupthismorning,IamgoingtousetheopportunityofanewhighwhichcoincideswiththefirstdayoftheParisAirShowtoinitiatethetrade。

Wellkeepatightstopofabout50conthisincasethemarketisofftotheracesthisweekandtakesBAevenhigherwithit。

Ontheflip-side,welllooktotakeprofitsquicklyinthenamewithanyquickmovebacktoorbelow100inthestock:

Trade?

BA($103)BoughtJuly100/95PutSpreadfor1。

00

-Buy1July100Putfor1。

70

-Sell1July95Putat。

70

Break-EvenonJulyExpiration:

-Profitsofupto4。

00btwn99and95,maxgainof4。

00below95

-Lossesofupto1。

00btwn99and100,withmaxlossof1。

00above100。

[hr]

OriginalPostJune14th,2013?

NameThatTrade?

$BAUpInTheAir

Iamgoingtokeepthisonereallysimple。

BAhasdefiedallcritics,simplelogicandgravityin2013?

Thestockisup35。

5%thisyear,tradingatalltimehighsdespitespendingmuchoftheyearwiththeirDreamlinergrounded。

Ihavenostrongviewonthecompanysfundamentalsandonapurevaluationbasisthestockpriceseemsreasonabledespitethemonsterrally?

BAistradingatamarketmultipleonearningsthatareexpectedtogrow23%thisyearand12%next。

BackinDecemberthecompanyraisedtheirdividend,whichnowyields1。

9%andsuggestedtheywillcompletetheir$3。

6billionsharerepurchaseauthorizationbybuyingbtwn$1。

5and$2billionworthofstockin2013?

Iftheyarentbuyinguphere,theyaresuretohavesupportloweronpullbacks?

Havingsaidallthat,Iamatrader,andalloftheexcitementintoMondaysParisAirShow?

withthestockacouplepercentfromalltimehighsgotmethinkingaboutaresearchnotefromMerrillLynch(below)highlightingBAs(andotherairlinemanufacturers)priceactionintoandoutoftheshow,hereweremymaintakeaways:

Since1995inthe30dayspriortotheParisAirShow,BAhasbeenuponavg9。

7%andup7。

5%vstheSPX。

Inthe15DaysaftertheParisAirShowsince1995?

BAhasbeendownonavg1。

9%,anddown3。

3%vstheSPX

ThisyearBAhasbeenup~10%sinceMay3rd(30tradingdays),incontrast,theSPXisonlyup2%duringthattime。

Technicals:Thestockis27%aboveits200daymva。

Thathasnthappenedinmorethan10yrs。

Anyplayforapullbackshouldtargetthe50daymovingaveragewhichrightnowisjustbelowthe95strike:

fromBloomberg

Volatility:Likeweveseenrecentlywithotherstocksthathavebrokenouttotheupside,BAsvolhasactuallyrisenwithintoitsnewhighs。

Thatshowsthelevelofconcernthesemoveshavecauseforinvestorsafraidofapullback。

HeresalookattheIV30(red)overthatpastyear:

fromLiveVolPro

MYTRADE:WithBAdown~1。

5%fromthismorningshighs,andwithwhatIthinkcouldbeexcitementonanybigorderannouncementsearlynextweek,coupledwithamarketthatcouldbepredisposedtorallyintoWednesdaysFOMCmeeting,IwanttolayoutabearishstrategythatIwanttoputonearlynextweekonstrength。

TheoreticalTrade?

BA($101。

75)BuyJuly100/95PutSpreadfor1。

25

-Buy1July100Putfor2。

15

-Sell1July95Putat。

90

Break-EvenonJulyExpiration:

-Profitsofupto3。

75btwn98。

75and95,maxgainof3。

75below95

-Lossesofupto1。

25btwn98。

75and100,withmaxlossof1。

25above100。

PayoutDiagram:

fromTradeMonster

PrettysimpleplayhereasImlookingforsomeweaknessinthestockfollowing/DuringtheAirshow。

Idlooktotakeprofitsonamovebelowmylongstrike。

95Seemstobearealisticlevelforapullbackifitcomes。

HerestheMerrillreport: