How to Buy Into This Boeing Stock Dip With Options

The past two months have seen relief and rebound in airline stocks. Boeing (NYSE: BA) was advertised next to the industry for Boeing stock bulls to gain a foothold.
Image of the Boeing (BA) aircraft in a hanger.
Source: Alex JW Robinson / Shutterstock.com
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With the turnaround, price action has improved dramatically and looks healthier than at any point in 2020. Today we're taking a closer look at the price level that is important for Boeing stock in the new year.
Since March the stock market blew up, airline stocks have been tied at the waist. The correlation between airlines has always been positive, but the extent to which they move together reached a whole new level after the global pandemic.
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Boeing also started moving with the group and their high correlation continues to this day.
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For this reason, it is worthwhile to analyze the entire industry in addition to Boeing shares. Until the economy fully recovers and we see companies trading more on their individual fundamentals, it's a good bet that the link between the two will remain.
JETS Turbulent Flight and Boeing Stock
Global Jets ETF (JETS) with the latest trend reversal
Source: TD Ameritrade's thinkorswim® platform
The infamous November 9 rally marked a milestone for risk assets - including airlines. The new favorite road ETF for space is the US Global Jets ETF (NYSEARCA: JETS).
Last month's mega-pop finally got JETS past its 200-day average and multiple zones of resistance. Optimists hope it has bottomed out and a gentle uptrend will bring us back to $ 30 and above. However, I am skeptical that we will see such a quick trip.
Air traffic is still falling dramatically and the basics of many airlines look terrible. As a result, I suspect the recovery will be characterized by turbulence. Monday's blow is a perfect example. With strong sales, JETS fell below the rising 20-day moving average for the first time since October.
Tuesday didn't improve much. We didn't hit Monday's high and at the time of this writing JETS is down another 1.5%.
The next two support zones come into play at $ 20 and $ 19. This slump will be a buying opportunity at some point, but I don't want to pull the trigger yet.
Boeing stock charts
Boeing (BA) weekly chart showing an upward trend
Source: TD Ameritrade's thinkorswim® platform
Now, if we put the industry's stance in context, we can take a closer look at the recent Boeing boom. But maybe "Bounce" doesn't do justice to the turnaround.
BA shares rose 72% from their October low, reversing both the daily and weekly downtrends. The last few weeks of sales are well deserved after such a glowing run. As for the weekly trend, this sale appears to be nothing more than a retracement of garden varieties. As long as we don't break $ 192, the newly discovered weekly uptrend will remain intact.
Boeing (BA) daily chart with pullback
Source: TD Ameritrade's thinkorswim® platform
The depth of the pullback shows some weakening of the daily uptrend with the recent break of the 20 day moving average. I like using the Monday low as a line in the sand to pull the horns in even more. We rebounded strongly from Monday's uptrend and ended on a compelling bullish candle. Let's call $ 210 the new support zone we need to stay above to maintain a near-term bullish outlook.
However, before entering a new long trade, wait and see if prices can get back to the high side of the 20-day moving average. We were declined on our first attempt to trade early Tuesday morning.
Long call spreads
It's easy to create a simple "if-then" type with our short-term trader battle lines. If BA stock closes above the 20-day price (near $ 225), bull games can be a hit. Waiting for confirmation that the next upswing has occurred prevents us from catching a falling knife.
The implied volatility is at the 13th percentile in the tank, so I prefer buying calls over selling puts once we rise above $ 225.
The Trade: Buy the February Bull Call Spread at $ 230 / $ 240.
The cost should be between $ 3.50 and $ 3.75 when the stock is triggered.
At the time of this writing, Tyler Craig held positions (neither directly nor indirectly) in the securities identified in this article.
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The How To Shop In This Boeing Stock Dip With Options post first appeared on InvestorPlace.
In this article
JETS
-0.36%
BA
-1.16%

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