After peaking in March of 2019, shares of Boeing Co. (NYSE: BA) have had a rocky year with shares ultimately dropping 23%.
That drop has investors wondering if this is an opportunity to buy into the biggest stock on the Dow. We think it's too early to say, but that shouldn't stop you from making money from the stock.
We'll show you what our research says about the stock, including a chart you don't want to miss. It'll show you exactly when shares of Boeing are going to be bought and sold.
And it's the perfect tool for turning Boeing's bumpy ride into cash...
What's Going on with Boeing Stock
After a pair of deadly accidents, the entire world has grounded the 737-Max jet made by Boeing. Airlines relying on this airplane were forced to substitute different planes on many routes.
What was supposed to be the company's flagship model turned into its worst nightmare. The plane has been grounded since March 2019. From cancelled orders to legal issues, Boeing's bottom line took an epic hit.
And that opened the door for the competition to steal away customers, which could have an impact lasting for years.
Boeing stock is already down more than 26% from its March 2019 peak price of $446.01. For a company that size, billions in value just evaporated into the ether. The question is whether the worst it is over for the stock or if it will continue to slide.
But if you are just interested in making money, Money Morning Millionaire Trader Andrew Keene says it doesn't matter.
Despite all the negative news, Boeing stock has traded in a range between $300 and $380 per share for much of the last year. Using an average price of $340, that's about an 11% deviation from the mean.
In other words, is still fairly stable. And predictable.
Traders can take advantage of a stock that has an identifiable pattern by buying when the stock is "oversold" and selling when it's "overbought."
Don't let the jargon fool you. If a stock is in a reliable range, we can make money on it when it goes up and when it goes down.
Andrew gauges these overbought and oversold levels using a technical indicator called the relative strength index (RSI). When the RSI is high, it's time to sell, and when it's low, it's time to buy.
The RSI moves in a range between 1 and 100, based on how intense the short-term buying or selling has been. Typically, notching any reading above 70 is a potential time to sell. Anything under 30 is a potential time to buy.
Boeing stock is a perfect example of this.
Take a look at the chart below. When Boeing's RSI hits 70, the stock plunges. When its RSI falls to 30, traders start buying.
You can wait until Boeing is oversold, when the RSI hits 30, to buy shares of stock and sell when they become overbought, when it hits 70. Or, if you are even savvier, you can sell shares short at the top and buy them back at the bottom.
However, short selling is not for everybody. And you really can't make big money just trading in one direction.
That's why we have an even better strategy to cash in on Boeing stock...
How to Profit from Boeing Stock
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With a consistent stock like Boeing, an iron condor is a great way to make some real money. And it is much easier to do than the name might suggest.
An iron condor consists of four options on the same stock with the same expiration date. If you break it down, it's really just a combination of simpler trades that allow you to surround the stock to profit as long as it stays in its range. Given Boeing's history, that is a good bet.
You may be familiar with options spreads, such as bullish put spread or a bearish call spread. Each of these involves two options with the same expiration date but different strike prices. Since you sell the more expensive of the two options and buy the less expensive, you start the trade with a net credit deposited in your account. If the trade works to your expectation, you keep the full amount of the credit when the options expire.
As you can tell, the bullish spread hopes the stock will go up in price, and the bearish spread hopes it will go down. By combining them together, the net result is that you want the stock to stay put so all options expire worthless - and you keep all the money.
You will need to trade four options on one underlying stock, all with the same expiration date. Each will have a different strike price.
Here's how it works. Buy a put with the lowest strike price and sell a put with the next lowest. At the same time, you sell a call with the third strike price and buy a call with the highest strike price.
Strike prices should be spaced evenly, and the price of the underlying stock should be somewhere between the middle two strike prices. If the stock price ends up between the middle two strike prices at expiration, all options will expire worthless, and you keep the net credit in your account.
In the case of Boeing, build your Iron Condor by choosing strike prices that are within the overbought and oversold regions on the chart. In that way, you can tighten the spreads a bit and set up the trade for bigger profits.
Here's what the profit and loss looks like:
The underlying stock price should be in between X and Y. If successful, your max profit is the credit you collected at the start of the trade. And your max loss is the difference in strike W and X minus the credit you collected.
Defined risk, known reward. That's a conservative play.
Anyone can learn to trade options. Don't let the jargon keep you from profit opportunities.
Just look what you can do with a little expert help...
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This is an opportunity you won't want to miss out on.