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Boeing (NYSE: BA - option chain) stock is falling today after the company revised its fourth-quarter loss to 12 cents per share, from an earlier report of 8 cents per share. In late January, when BA first reported this loss, the stock dropped $3, and today it is down another $2. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BA.This morning, BA opened at $41.29. So far today the stock has hit a low of $40.05 and a high of $42.23. As of 12:25, BA is trading at $40.35, down $2.45 (-5.7%). The chart for BA looks neutral and S&P gives BA a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in three months as long as BA is below $50 at May expiration. Boeing would have to rise by more than 23% before we would start to lose money. Learn more about this type of trade here.
BA hasn't been above $50 since November and shown resistance around $43 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in BA.
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