Daily Traders Edge

Boeing’s about to break below a key level, and here’s how one trader is playing the drop

April 10
10:11 2019

There’s more trouble ahead for Boeing shares as the stock now faces a key level, according to TradingAnalysis.com founder Todd Gordon.

On Tuesday, shares of Boeing dropped more than 1 percent after the company saw deliveries and orders on its 737 jets plummet in the first quarter.

The stock is down more than 17 percent from its high on March 1, and as it approaches its 200-day moving average, Gordon suggests a break below could open up the flood gates to more pain.

“We’ve bounced from the 200-day moving average, traded up to $400, and you’ll notice that we’ve failed at that $400 mark, which is that gap down at the beginning of that new cycle,” he said Tuesday on CNBC’s “Trading Nation.” “So resistance seems to be in place to attack this yellow line here, which is the 200-day moving average.”

As a result, Gordon wants to short Boeing going into the company’s earnings report on April 24. He says the stock could not only fall below its 200-day moving average, it could actually fall to around $340, which it hit in January.

Since he’s not looking for “an all-out collapse” for shares of Boeing, Gordon says, he wants to play the stock using an options butterfly. In this case, he is using the combination of a put debit spread and a put credit spread.

Continue Reading at CNBC

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