Boeing Co engineers work on 737 MAX design (pictured below)
This Tiger Cub Giant Is Betting On Banks And Tech Stocks In The Recovery
The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
Options Market Sentiment Turns Positive On Boeing Co
So I was a bit surprised to see Boeing appear among our system's top ten names on Tuesday.
Those names are selected largely based on options market sentiment. Why might options market participants be bullish on Boeing Co?
What Are Boeing Bulls Thinking?
It seems obvious why options market participants might be bullish on other names in the top ten. For example:
- The iShares Silver Trust (SLV) - record fiscal and monetary stimulus weakening the dollar.
- Amazon (AMZN): COVID-19 lockdowns and rioters have wrecked a lot of its local business competition.
But why might they be bullish on Boeing Co over the next several months? Could it be Boeing's new UV wand to sanitize airliners?
My guess is their near term bullishness rests on two main factors.
- Lack of competition. Airlines looking to buy jumbo jets are faced with a duopoly: Boeing and Airbus. The occasional 737 MAX falling out of the sky is fatal for its passengers and crew, but not for Boeing Co.
- Hope for a return to normal after the election. Some observers have speculated that the continued COVID-19 lockdowns have been driven in part by politics: to make voters miserable so they turn against the incumbent. If that's true, then there will be less reason to maintain the lockdowns after the election. And a decline in lockdowns may release pent up demand for travel which could spur airlines to order more planes.
That second factor is supported by push back against the lockdowns from within the medical community globally.
Another possibility is that Boeing bulls are simply wrong, and our system was wrong to select Boeing as a top name. In the event that ends up being the case, here are a couple of inexpensive ways cautious Boeing bulls can hedge their risk using our app.
Note that the last hedge shown in the video above essentially pays longs to hedge between now and November, as it offers a net credit. Something to keep in mind if you're betting on the "clowns" and "monkeys".