Boeing (BA) PriceWatch Alert Up To 9.05% Downside Protection

Posted on Tuesday, August 26, 2008 8:07 AM

Boeing (NYSE: BA) closed yesterday at $64.07. So far the stock has hit a 52-week low of $60.77 and 52-week high of $107.15. Boeing stock has been showing support around 62.47 and resistance in the 66.29 range. Technical indicators for the stock are Bearish and S&P gives BA a positive 4 STAR (out of 5) buy rating. BA appears on the Investors Observer Momentum Plays list. For a hedged play on this stock, look at an Oct '08 60 covered call (BA JL) for a net debit in the $58.27 area. That is also the break even stock price for this trade. This covered call has a 53 day duration, provides 9.05% downside protection and a 2.97% assigned return rate for a 20.45% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the BA Jan '10 30 Call (WBO AU) and selling the Oct '08 60 call (BA JL) for a $29.30 debit. The trade has a 53 day life and would provide 7.44% downside protection and a 2.39% assigned return rate for a 16.00% annualized return rate (for comparison purposes only). Boeing has a current annual dividend yield of 2.53%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]