Leverage Boeing’s Struggles With This Options Strategy

Posted On March 12, 2019 2:56 pm
By: Steve Smith

Shares of Boeing (BA) were down over 14% at one point yesterday, following the second fatal crash of its 737 MAX 8 aircraft. The stock tried to rebound late in the day, but is back under pressure today. This has caused implied volatility in options to jump, creating a great trade opportunity.

The crash of Ethiopian Airlines comes some five months after a Lion Air crash that also resulted in fatalities of all passengers and pilots. In both cases, the crash occurred shortly after takeoff with the probable cause tied to new software, which is supposed to stabilize the plane.

After the first crash, it became known that Boeing had not highlighted the change in technology, and some pilots might not have been fully aware or trained on the update.

Now that a…

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.