A Little Perspective on Boeing

 | Jul 12, 2013 | 3:54 PM EDT
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Maybe you buy half and then buy the other half when we find out what really happened to the Ethiopian Airlines Dreamliner that caught fire at London's Heathrow Airport?

I know -- who would ever think about buying Boeing (BA) stock before we found out what caused that fire?

The answer is: anyone who listened to CEO Jim McNerney when he came on "Mad Money." McNerney said the battery problems are fixable, and that he would never be worried about the issue longer-term.

We don't know if it is the battery, but let's say it is. Here's what happens: Boeing examines the situation. They figure out what went wrong. Then they fix it.

In the interim, the stock will go down more, perhaps until the release of the company's earnings report -- due Wednesday -- when we'll know more. But let's say it isn't the battery. Let's say it was maintenance-related. This may be the only chance to get in the stock ahead of what could be a pretty incredible quarter when Boeing reports.

Remember, Boeing has a 20-year plan. It put in no cancellations of Dreamliners at height of the crisis. None. You can't get one until 2019. It's more likely that airlines called Boeing and asked if there were cancellations so they'd be able to jump the queue, instead of there being actual outright cancellations. 

Now one thing is certain. If there were ever a stock in need of a correction, it is this one. It's been on a straight-line tear since the high $60s, at which point our own Bob Lang had said it was the best chart in the book on a technical basis.

But let's say you are really concerned that something could go even more wrong. How about this strategy? Buy the August $95 calls for $8 and change.

That gives you both a nice stop-out and a call on a terrific quarter. Oh, and if it turns out that Ethiopian Air is the one at fault? You just hit a home run.

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we will add this here to cheaply protect our downside a bit BOUGHT SPY SEP 244 PUT AT 2.70 ...



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