Tuesday, January 28, 2014
Boeing: Hitting Crusing Altitude
It has been a long time since CCI discussed its position in Boeing.
As discuss in this three year old article ( http://seekingalpha.com/article/249485-boeing-early-boarding-for-investors-seeking-good-mid-term-prospects) CCI suggested Boeing seemed to be starting the beginning of a cycle of new aircraft production and related products. The article suggested $70 was a good entry price, with $100 to $120 seeming like a "target" price.
One of the benefits of blogging is it requires an investor to document their rationale for owning a position. With the start of a new year, and Boeing trading around $140 it was time to re-examine the position. The following article http://seekingalpha.com/author/common-cents/instablog documents my current thoughts about Boeing.
From a portfolio position, taking profits from this position that is up 100% is certainly an option. However, while Boeing's upward run may be over, it seems to me that their backlog of orders makes it highly likely Boeing won't crash and burn. IMO, It seems like there is a decent probability that Boeing stock may cruise along at this altitude for awhile. Based on that forecast CCI is going to treat the Boeing position as a good candidate to write covered calls against. Specifically, with Boeing trading around $137 and earnings later this week, CCI sold the Feb $145 call against a portion of the portfolio's holding for $1.00. If the stock surges on earnings news, CCI will likely let the position be trimmed with the assignment of the calls. If the stock goes sideways or falls from its current levels, the call premium will add a modest .7% return to the existing gains. CCI would then likely re-establish the covered call further out in the future.