At least one trader is betting on a bounce higher in airline manufacturer Boeing (BA) this month. The October 23rd $187.50 calls just saw 1,188 contracts trade. That’s a nine-fold rise in volume over the prior open interest.
Shares trade around $171, so would need to rally about 10 percent in the next 17 days for the trade to move in-the-money. That’s no small feat, but shares of the company have been volatile enough that it could happen.
The option trader paid $3.70, or $370 per contract, so if shares do move higher quickly, the option should deliver mid-to-high double-digit returns. Shares are still down nearly half from where they traded at the start of the year, but are up modestly over the past few weeks.
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The company was facing some short-term headwinds over its 737 Max plane before air travel ground to a halt earlier in the year. The latest trends on flights show a long and slow recovery, which will also slow the demand for new planes.
Action to take: As a short-term momentum play, the trade looks attractive. Shares dipped into the $140 range in September, and if the current uptrend continues, the option could move in-the-money. The option does expire just before the company reports earnings, however, so traders looking for a bigger move may want to select a strike date later in the year.