- The Boeing Company (BA +1.7%) reports 95 commercial deliveries in Q1 up from 77 a year ago.
- Of the 95 aircraft delivered, 868 were 737 MAX jets.
- For the month of March, the company delivered 41 aircraft, including 34 of the 737 Max.
- Boeing (NYSE:BA) dropped 152 aircraft from its backlog for the accounting requirement in March, two-thirds of which were related to the war in Ukraine.
- The company's Q1 results will be out on April 27.
In Q1 last year they made $1.4Bn on $15.2Bn in sales and in Q2 they made $2.4Bn on $17Bn in sales and 23% more than $14Bn is $17Bn so we can infer profits should be more like Q2 and BA is only expected to make $2Bn all year and $4.4Bn next year. It's possible materials and labor are hitting them on costs but 41 in March is on the way to 120 in Q2 and that would be very substantial no matter what.
In the LTP, we already sold 5 of the 2024 $200 puts for $30 for a net $170 entry and those puts are now $43.65 so we're down 45.5% on that position but BA is at $177.76 so the "loss" is all premium and only realized if we take it. I don't see the need to sell more unless BA is much lower and then maybe a 2x roll to 2025 whatevers – the 2024 $150 puts are $19 so I'm sure we can drop even lower in 2025 for a net $135 entry on 10.
Since I'm very sure I want to buy 1,000 shares of BA for $135 in our $2.4M portfolio (which is well-hedged), then I still consider our original $15,000 collected to be free money and now we can put it towards a bull call spread in the LTP:
- Buy 20 BA 2024 $170 calls for $42.50 ($85,000)
- Sell 20 BA 2024 $225 calls for $21.50 ($43,000)
That's net $43,000 on the $110,000 spread and we sold the puts for $15,000 so net $28,000 with $82,000 (292%) upside potential but, as a new trade, you can sell the 2024 $200 puts for $43.65 and that's $21,825 and the net of a new spread would be just $20,175 with $89.825 (445%) upside potential. Should BA go lower, THEN I'll want to sell 5 more puts and roll the $170s to the $150s (now $54) for $10 or less so $20,000 more intended to spend if BA goes lower less any additional net from more puts sold – which will depend on WHY they go lower. If we think the reason is silly – then we'll do an aggressive sale. If we think BA is weak, we'll do the 2x roll to 2025 which won't net us more money.
Either way, I expect to be able to also make money selling calls along the way. July $200 calls are $6 so just selling 5 of those brings in $3,000 for the Quarter (one of 7 we have to sell) but let's see how earnings look first.
BA reports on the 27th so we'll see how things are going but I'd hate to miss an opportunity to get them this cheap.
