TP Says...
Tuesday, January 14, 2020
BA got a new CEO yesterday in exchange for paying him a base annual salary of $1.4 million and $26.5 million in bonuses if the company reaches certain milestones, including the return to the skies by the 737 MAX.  Was it a good trade?  Who knows?  But it would seem given BA’s news over the past year that the company needs more than a new CEO.   Some better engineers might make the public more confident boarding a 737 Max if and when it gets back in service.  BA’s stock price has been range bound for the past couple of weeks, so the market isn’t signaling bullishness.  That might change with earnings on Jan 29, but the company seems to be prepping the market for some not-so-great news.  That’s also increasing BA’s IV, and its IV rank is 52%, which is creating decent credits for short premium strategies.  If you think BA won’t be rallying anytime soon and are willing to take risk through earnings, the short call vertical that’s short the 342.5 call and long the 345 call in the Feb weekly expiration with 31 DTE is a bearish strategy that collects a credit 1/3 the width of the strikes, has a 74% prob of making 50% of it’s max potential profit before expiry, and that generates $.55 of positive daily theta.
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