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Option Brief: Ford Motor Company (NYSE:F) is scheduled to report October auto sales this Friday, Nov. 1. One week ahead of that important event, the automaker's option pits were busy -- specifically, last Friday, total volume finished at a 44% mark-up to the typical daily amount. The most active non-expiring option was the December 19 call, which saw nearly 11,300 contracts change hands.
Especially notable with respect to that strike was a block trade of 10,000 contracts. The lot crossed at the ask price, suggesting it was purchased, and open interest spiked over the weekend, indicating it was freshly minted. By purchasing the calls to open, Friday's speculator expects F shares will extend their nearly 70% year-over-year rally by the end of this week, and finish north of the strike price. If that move fails to materialize, the most the trader will lose is the initial premium paid.
Digging even deeper ... last Friday was actually the third consecutive day in which large blocks were bought to open at the aforementioned strike. Trade-Alert speculates a single individual may have been responsible for the trades (which totaled 40,000 contracts), in the anticipation of strong monthly sales numbers. Technically, however, Ford Motor Company (NYSE:F) -- currently perched at $17.60 -- hasn't spent a day above $19 since the end of 2001.