We have seen Boeing on the major headlines of just about every major media company over the last year. Having a company under such a watching eye from the public certainly brings a lot of attention not just from your everyday traveler but also from your investor.
Boeing is one of the most recognized American Aerospace Companies. Being most well known for their commercial airlines they have been in quite a dilemma recovering from the tragedies of the two fatal crashes in a new line of their fleet.
Their Boeing 737-MAX is grounded until approved by the FAA. Traditionally Boeing’s team has been granted ability as an OEM (Original Equipment Manufacturer) to be able to approve their aircraft for airworthiness. Although for this particular situation the FAA has stepped in and made clear that the aircraft will only fly with their approval.
Although there is some speculation that this process may take longer than expected. As there are some breakdowns in knowledge and information that Boeing has that the FAA does not.
For starters all the testing for the aircraft was done by Boeing and not the FAA. Although it was stated that it would be conducted under the oversight of the FAA the individuals who will be approving the aircraft to fly are not the same individuals who are educated in how to engineer and troubleshoot the issues at hand.
Being that there is a learning curve that needs to be first met so then the FAA can appropriately asses the if the Boeing 737-MAX will be safe to fly, this will take some more time. Time that many airlines, vendors and clients around the world have been running thin of. Pressure from airlines around the world to bring the aircraft back into the air is bring stress to the line on Boeing Field.
Flight attendants on the other end have started petitioning to not work or operate on the 737-MAX. As manufactueres push for production but service workers beg to not fly on the aircraft this is leaving a sour taste in the mouth of consumers.
Do you feel that even once the aircraft is airworthy again that many travelers will request to not fly on the plane? We have seen this happen before as guest were calling in to the airline to ensure what model aircraft they were flying on was not the 737-MAX.
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Boeing as a stock has provided incredible returns year over year for the last decade and the growth has been incredible. With Net Profit margins over 300% we see strong historic growth. Although as investors its important to not get so caught up in the past but look to see whats the next directional move for the stock.
We often find ourselves over complication subjects to make them appear much more difficult to understand. So to better clear up any confusion, yes trading stocks can be very complex as there are many moving pieces although it is important that you do not make it complicated.
When I look on my Think or Swim platform under the Fundamental section for Boeing (NYSE: BA) we see some mixed emotions from the overview. First the Research team is saying to reduce our positions while The Street is currently in a hold position. Then we finish off with the Market Edge showing a long outlook on Boeing still holding strong.
The all time high for Boeing sits right around $439 and we are currently down sitting at $373.5. Price couldn’t break up towards hitting $450 and now we care down back under the $400 range. Being that we are hearing some talks of more delays in getting the 737 MAX flying this isn’t looking good.
This means that Boeing can’t move the metal sitting on their field and production is slowing down. As less aircraft are being made and sold this will quickly start to impact their cash flow if it is not doing a major impact already.
If you currently are holding positions of Boeing that you are looking for a strategy to potentially reduce your loss potential or even gain some capitol in the even that the stock trades sideways for the next week and make no major movements I would look into potential options set ups in combination with your current stock position.
Selling an out of the money call or possible buying a put could give you the opportunity to protect some of your capitol in the event of a drop in price, or earn some additional income on a weakening stock. Using Options to be able to maximize your earning potential is a great strategy that can be done for relatively low cost.
Overall playing a very defensive strategy will prevent any unexpected loss in capitol over this holiday season. Make sure you are securing any profits you have now while they are still winners. Winter is coming and its important we prepare ourselves. As always make sure to follow your trading rules and most importantly have fun today everyone!
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