BA, where from 320?
Updated
I'm seeing a lot of short targets lately on BA of $275'ish, but I just don't see it. TA would say that the $320 limit can only be tested so often, but lets remember, most of the weak hands have been shaken out of this thing. All that's left are the funds, retirement accounts, etc...and since BA yield is still higher than bonds, I would say they are going to stay put.
There's also been a lot of talk about BA having to repay their customers for lost revenue, and that it could be up to 10B in costs. If this was 10 years ago, I would join in happily and say BA is going down like a 737 max, however, this is 2020...where the borrowing costs are sub 2%, and BA has plenty of cash in moat to maintain their bond ratings. To put that in perspective, BA can likely borrow at a rate slightly higher than their own dividend.
All being said, BA makes up a significant portion of US GDP, so eventually big bro will get tired of the drag and force the FAA and BA to "fix" the problem. The bad news will probably keep up until earnings here, and as long as the dividend is safe, I see 320 holding. I would go long with a stop at 318, with a re-entry of around 300. You could also sell covered calls against this without exiting to lower your entry point as this would be more tax efficient.
There's also been a lot of talk about BA having to repay their customers for lost revenue, and that it could be up to 10B in costs. If this was 10 years ago, I would join in happily and say BA is going down like a 737 max, however, this is 2020...where the borrowing costs are sub 2%, and BA has plenty of cash in moat to maintain their bond ratings. To put that in perspective, BA can likely borrow at a rate slightly higher than their own dividend.
All being said, BA makes up a significant portion of US GDP, so eventually big bro will get tired of the drag and force the FAA and BA to "fix" the problem. The bad news will probably keep up until earnings here, and as long as the dividend is safe, I see 320 holding. I would go long with a stop at 318, with a re-entry of around 300. You could also sell covered calls against this without exiting to lower your entry point as this would be more tax efficient.
Note
More bad news, thats why we have stop losses. In retrospect here, another great trade for BA at these pivots is a strangle. Would have had a decent profit here.
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