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Ford Motor Company (F) Bears Place Bets Ahead of Monthly Sales Report

F's weekly 12/6 16.50-strike put is being bought to open today

by 12/2/2013 3:00 PM
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Option Brief: Ford Motor Company (NYSE:F) will unveil its monthly sales number tomorrow morning, and one group of option players is bracing for a negative reaction to the report. The stock's weekly 12/6 16.50-strike put is one of the more active positions today, where 3,189 contracts have changed hands -- mostly at the ask price. Volume is outstripping open interest, implied volatility has jumped 3.7 percentage points, and data from the International Securities Exchange (ISE) confirms buy-to-open activity.

By purchasing the puts to open, speculators expect F to retreat roughly 3.8% from its current perch at $17.15 to breach the strike price before the close on Friday. However, should the stock remain north of $16.50, the most the traders stand to lose is the initial premium paid, which, according to Trade-Alert, is a modest $0.03 per contract.

This bearish bias is a bit puzzling, considering Ford has tacked on more than 32% in 2013, thanks in part to its rising 120-day moving average. What's more, this trendline -- currently perched at $16.81 -- cushioned the stock's most recent pullbacks. In light of this technical tenacity, a portion of today's put buying at the out-of-the-money strike could simply represent Ford Motor Company (NYSE:F) shareholders hedging against any near-term downside.


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