Options Update: How to Play Boeing

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Feb. 10 (Bloomberg) -- MKM Holdings Strategist Jim Strugger discusses his options play for Boeing on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Million options on the vick.

People say volatility is going to go down.

Stocks are going to go up.

What is going on?

It is kind of an amazing that?

That is the most actively traded volatility product.

It is at an all-time high.

It is clear that from a macro perspective, investors are looking for volatility to climb and stocks to go higher.

They have nailed this pullback.

The call ratio peaked before the s&p did.

His continued to decline sharply.

Apparently, they were well hedged.

On the backend, they are getting short volatility and ostensibly long stocks as well.

That sets with our view.

Our broad view is we entered a time of structurally low volatility in 2013. we have had eight of these events since then.

When we think is likely going to dissipate more and be over and enable stocks is among the more intense.

Other volatility metrics peaked at through levels in the last 13 months.

We are on board with that.

One of the things we saw is an increase in correlation among individual stocks.

Everything was going down.

It made it hard to make money in that environment.

We are going up, will we see more differentiation?

I know you have a strategy to take advantage of individual stocks that are benefiting from a rebound.

When stocks come in broadly, they'll come in.

We run a screen of s&p 500 constituents.

We isolate stocks that may have been oversold.

We want names and reported fourth-quarter earnings.

We want them to have beaten consensus estimates and are above their 200 day moving average.

We look at how far below they are from their level.

We use those two factors equally to create a list of potential targets.

Their business might be performing well, but they were punished along with everybody else more than they should have been.

Now you're getting into these stocks.

Let's talk about two of the picks in particular.

Boeing and jacobs engineering, they are both industrial.

The stock was up 16%. we -- in the wheelhouse of what we are talking about, the stock was unfairly come in sharply.

Volatility remains pretty low.

We want to look at it and by 135. thank you so much.

We'll be back on the markets in

This text has been automatically generated. It may not be 100% accurate.


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