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G7 meeting puts Boeing at risk

What's Happening

Aerospace and defense contractor Boeing ( BA ) has been a strong outperformer in recent years, but trade tensions could put the stock at risk. The G7 meeting currently taking place could have a big impact on the stock moving forward if trade tensions rise. BA shares are up 24% on the year.

Technical Analysis

BA was recently trading at $368.20, down $6.28 from its 12-month high and $180.50 above its 12-month low. Overall technical indicators for BA are bullish with a strong upward trend. The stock has recent support above $340.00 and recent resistance below $374.50. Of the 19 analysts who cover the stock, 13 rate it a "strong buy", and six rate it a "hold". BA gets a score of 88 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

The world is currently dealing with the possible breakout of an all-out trade war, and over the weekend President Trump will attend the G7 meeting in Canada, where trade will be the primary topic. Trump has recently criticized Canada and the European community for treating the U.S. unfairly, and has proposed tariffs on goods to try and balance out what he sees as unfair trade tactics. A trade war could have a serious impact on Boeing's international demand and have a material impact on the company's sales and earnings moving forward. The stock recently lost some ground as trade fears rose between the U.S. and China, only to move higher as the situation eased. If the G7 meeting is a disappointment, and trade fears once again spike, BA stock will certainly give back some of its recent gains. Trump is not going into the meeting with high hopes, and if the somewhat unpredictable president fans the flames of a potential trade war the overall market will react negatively, and Boeing has as much to lose as any U.S. company if a trade war does indeed break out.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a July 320/330 bull-put credit spread for a $0.55 credit. That's a potential 5.8% return (50.6% annualized*) and the stock would have to fall 10.2% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a July 400/405 bear-call credit spread for a $0.50 credit. That's a potential 11.1% return (96.6% annualized*) and the stock would have to rise 8.8% to cause a problem.

Covered Call Trade

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on InvestorsObserver.com


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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