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Options traders bet on a Boeing rebound into the weekend on CEO testimony

Options traders bullish on Boeing CEO's testimony

Boeing CEO Dennis Muilenburg is testifying before a Senate panel Tuesday, his first appearance in Congress since two 737 Max crashes that took place over the last year.

Muilenburg will also testify before a House committee on Wednesday, and is expected to take a remorseful tone as lawmakers question him about how the 737 Max was designed, the plane's certification process and the MCAS flight-control system that has been implicated in both crashes.

While Boeing's stock has performed woefully over the last month, options traders think Muilenburg's testimony might just lead to a bit of a relief rally.

"Today, we did see calls outpace puts by about 2-to-1. That's not something we've been conventionally seeing in Boeing as of late," Michael Khouw, president of Optimize Advisors, said Monday on "Fast Money."

As Khouw would point out, the most active contracts were the Nov. 1 weekly 350-strike calls. About 3,000 of those traded hands for an average price of $1.60.

"Buyers of those calls are hoping the stock gets a bounce above $350 by at least the $1.60 that they paid after we see the CEO testify," Khouw said.

This isn't exactly a high-conviction bet, though, and reads more like cautious optimism than genuine hopes for a serious turnaround in the stock.

"Take a look at how much [these traders] are paying. $1.60, that's a small fraction of the current stock price, and it's very short in terms of how long these calls go in terms of expiration," said Khouw.

Indeed, these call contracts cost only 0.5% of the current stock price, and since they expire Friday, it doesn't look like these traders are willing to bet on this bounce lasting too long.

Boeing was modestly higher in Tuesday's session.