When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (BA) – BUY
BUY the Boeing (BA) April 2019 $315-$335 in-the-money vertical BULL CALL spread at $17.70 or best
Opening Trade
3-18-2019
expiration date: April 18, 2019
Portfolio weighting: 10%
Number of Contracts = 6 contracts
You would think that with all the bad news out, Boeing shares would finally hit bottom. All Boeing 737 Max 8 planes have been grounded. The 58 new $100 million planes a month scheduled for delivery have been suspended. That means one of the largest companies in the United States is banned from selling far and away its most important product.
Wrong!
This morning we learned that Federal prosecutors are investigating Boeing as to whether it was criminally negligent in obtaining the troubled aircraft’s original FAA certification. Subpoenas for emails and documentation have been issued, and a general ruckus created.
This was a guaranteed outcome. You want deregulation? This is what you get. You cut budgets? This is also what you get. I highly doubt that Boeing will be found criminally culpable for the two crashes. This is all an outcome from the US government’s withdrawal from oversite of the private sector.
The truth is that the technological and cost advantages of the Boeing 737 Max are so enormous that airlines can’t compete without them. That explains why Boeing has a ten-year, 4,636 plane order book for the plane. Boeing has to fix this problem or there will be NO aircraft industry.
This is why Southwest Airlines (LUV) has ordered 249 of the cutting edge planes, followed by 123 for United (UAL) and 76 for American (AAL).
Having been a commercial pilot for most of my life and once owning a European air charter company, I have some insights into this issue.
These two crashes are not a software problem which can be fixed in days. It is a pilot training issue. And I have been subjected to this training myself hundreds of times until I can do it blindfolded and in my sleep. Whenever you have a runaway autopilot problem, you PULL THE DAMN CIRCUIT BREAKER!
However, if you are poorly trained, as are many emerging airline pilots and can’t remember which of the 100 circuit breakers you need to pull with a runaway autopilot, then the plane will crash. The harsh truth here is that MOST modern-day pilots can’t hand fly a plane without an autopilot.
I am therefore willing to bet that Boeing stock is not going to fall another 9.45% over the next 19 trading days. So, I am buying the Boeing (BA) April 2019 $315-$335 in-the-money vertical BULL CALL spread at $17.70 or best.
This is a bet that Boeing shares will not fall below the $335 strike price by the April 18 options expiration date. That would be a total decline of 24.7% from the recent top for one of the best run companies in America.
If you don’t do options buy a small position the stock outright for a quick trade.
Here are the specific trades you need to execute this position:
Buy 6 April 2019 (BA) $315 calls at………….………$56.00
Sell short 6 April 2019 (BA) $335 calls at………….$38.30
Net Cost:……………………..…….………..………….….....$17.70
Potential Profit: $20.00 - $17.70 = $2.30
(6 X 100 X $2.30) = $1,380 or 13.00% in 19 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.
