http://www.options-trading-education.com/6525/buy-calls-on-alcoa/
Buy Calls on Alcoa
Although lower second quarter earnings drove Alcoa’s stock price lower news of a new contract with Airbus may be good reason to by calls on Alcoa. Aluminum prices are at historic lows which is what drove down aluminum profits for the company in the second quarter of this year. However, its presence in aerospace is substantial and growing. A recent press release tells us that Alcoa (AA) has just finalized agreements worth $1.4 Billion with the European airplane maker, Airbus, to supply a wide range of products for virtually all of Airbus’ products. That includes the newest, the A350. Highlights of this contract are the aluminum and aluminum-lithium parts for wings and fuselage panels. These parts are meant to compete with the carbon fiber reinforced plastic parts used by Boeing in its 787 Dreamliner. The company has developed state of the art processes to make aluminum-lithium parts giving it a technical edge over many other aluminum makers and giving traders a reason to buy calls on Alcoa before the rest of the market catches on. Overall Alcoa gets three and a half billion in revenue yearly from its aerospace customers with products including aluminum, lithium, titanium, and nickel. Although many are tempted to buy puts on airline stocks there are lots of planes in the pipeline and lots of profits for efficient suppliers, which may be a good reason to buy calls on Alcoa.
Where Will Alcoa’s Profits Be?
In an increasingly competitive world the most successful companies are commonly the most innovative. When Alcoa found out that Boeing intended to use carbon fiber reinforced plastics on its Dreamliner the company looked for an alternative that it could make. It had to be competitive in being stronger, lighter, corrosion resistant, and cheaper. The technology they developed was aluminum-lithium. According to Alcoa, using aluminum-lithium instead of composites will improve fuel efficiency by a forth, reduce weight by as much as a tenth, and result in a product that requires roughly half as many inspections over time for structural problems and corrosion issues. As with the use of composites aluminum-lithium results in an airplane with better humidity control and larger windows. In the world today there are over eight thousand commercial aircraft on order. This amounts to eight years of aircraft production. These would also appear to be good reasons to buy calls on Alcoa. Today’s leading aircraft makers are Boeing and Airbus. However, Embraer in Brazil, Comac in China, and Russian manufacturers all are on the rise. Given time these companies will cut out niches in the global market and use advanced technologies such as Alcoa’s aluminum-lithium parts to make lighter, stronger, more cost efficient aircraft. Succeeding in options trading often has to do with seeing the future and then timing the purchase or sale of an options contract.
2024 04 03 AZ GOP LD4 Gen Meeting Minutes FINAL.docx
Buy Calls on Alcoa
1. Buy Calls on
Alcoa
By
www.Options-Trading-Education.com
2. Although lower second quarter
earnings drove Alcoa’s stock
price lower news of a new
contract with Airbus may be
good reason to by calls on
Alcoa.
www.Options-Trading-Education.com
3. Aluminum prices are at
historic lows which is what
drove down aluminum profits
for the company in the second
quarter of this year.
www.Options-Trading-Education.com
4. However, its presence in
aerospace is substantial and
growing.
www.Options-Trading-Education.com
5. A recent press release tells us
that Alcoa (AA) has just finalized
agreements worth $1.4 Billion
with the European airplane
maker, Airbus, to supply a wide
range of products for virtually all
of Airbus’ products.
www.Options-Trading-Education.com
6. That includes the newest, the
A350.
www.Options-Trading-Education.com
7. Highlights of this contract are
the aluminum and aluminum-
lithium parts for wings and
fuselage panels.
www.Options-Trading-Education.com
8. These parts are meant to
compete with the carbon fiber
reinforced plastic parts used
by Boeing in its 787
Dreamliner.
www.Options-Trading-Education.com
9. The company has developed
state of the art processes to
make aluminum-lithium parts
giving it a technical edge over
many other aluminum makers
and giving traders a reason to
buy calls on Alcoa before the rest
of the market catches on.
www.Options-Trading-Education.com
10. Overall Alcoa gets three and a
half billion in revenue yearly
from its aerospace customers
with products including
aluminum, lithium, titanium,
and nickel.
www.Options-Trading-Education.com
11. Although many are tempted to
buy puts on airline stocks
there are lots of planes in the
pipeline and lots of profits for
efficient suppliers, which may
be a good reason to buy calls
on Alcoa.
www.Options-Trading-Education.com
13. In an increasingly competitive
world the most successful
companies are commonly the
most innovative.
www.Options-Trading-Education.com
14. When Alcoa found out that
Boeing intended to use carbon
fiber reinforced plastics on its
Dreamliner the company
looked for an alternative that it
could make
www.Options-Trading-Education.com
15. It had to be competitive in
being
stronger, lighter, corrosion
resistant, and cheaper.
www.Options-Trading-Education.com
17. According to Alcoa, using
aluminum-lithium instead of
composites will improve fuel
efficiency by a forth, reduce
weight by as much as a tenth,
www.Options-Trading-Education.com
18. and result in a product that
requires roughly half as many
inspections over time for
structural problems and
corrosion issues.
www.Options-Trading-Education.com
19. As with the use of composites
aluminum-lithium results in an
airplane with better humidity
control and larger windows.
www.Options-Trading-Education.com
20. In the world today there are
over eight thousand
commercial aircraft on order.
This amounts to eight years of
aircraft production.
www.Options-Trading-Education.com
21. These would also appear to
be good reasons to buy calls
on Alcoa.
www.Options-Trading-Education.com
23. However, Embraer in
Brazil, Comac in China, and
Russian manufacturers all are
on the rise.
www.Options-Trading-Education.com
24. Given time these companies
will cut out niches in the global
market and use advanced
technologies such as Alcoa’s
aluminum-lithium parts to
make lighter, stronger, more
cost efficient aircraft.
www.Options-Trading-Education.com
25. Succeeding in options trading
often has to do with seeing the
future and then timing the
purchase or sale of an options
contract.
www.Options-Trading-Education.com
26. Using Options to Get a
Good Price
www.Options-Trading-Education.com
27. Despite what could be a rosy
future for Alcoa in making
parts for the automotive and
aerospace industries the stock
is down today due to low
aluminum prices.
www.Options-Trading-Education.com
28. Options traders can buy calls
on Alcoa simply to make a
short term profit.
www.Options-Trading-Education.com
29. However, long term investors
can also buy calls on Alcoa in
order to buy the stock at a
depressed price prior to a
global economic recovery and
more profits for Alcoa.
www.Options-Trading-Education.com
30. Risk management in option
trading allows investors to
stake out positions very cost
effectively and not buy until
the stock goes up.
www.Options-Trading-Education.com
31. For more insights and useful
information regarding options
and options trading, visit
www.Options-Trading-
Education.com.