Yesterday we had good old fashioned follow through, and the market was only down small on the day.? VIX made a power move only to 16.27 and it looks like it will close in the low 15.20s.? There is now doubt the market can change direction in a heartbeat if necessary and 1500 in the SPX looked like the sticky area.? A stock that performed well all day was Boeing so let?s look.
Boeing came up with a plan for the battery on the 787.? While there is not a surety the FAA will accept it I think this means the problem will get solved one way or another.? To see how the market is handling the problem examine the realized volatility lately.? The white line is the 10 day realized volatility in the Livevol chart.? After some big moves when the news first broke there has been a slow ride down as BA is less volatile.? Note that the 30 and 60 day IV has stayed the same and during more normal conditions there is a bit of contango in the relationship.? I think there is a decent play here.
?LivevolX?www.livevol.com
The Trade
I think BA Mar/May 80 time spread looks ok.? The IV is not to high in the back month and BA is still finding its way back to near term highs.? The time spread should offer some cover with a little edge.
I have a BA position