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Ford Motor Company (F) Bulls Bet On a Short-Term Rebound

February call buyers expect Ford Motor Company will re-take the 17 strike

by 1/17/2014 10:58 AM
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Option Brief: Ford Motor Company (NYSE:F) calls outpaced puts by a margin of more than 3-to-1 yesterday. Among the strikes that experienced notable volume was the February 17 call, where north of 6,400 contracts crossed the tape -- 80% at the ask price, suggesting buyer-driven activity. Open interest increased at the position overnight, as well, indicating the contracts were newly initiated.

By purchasing the calls to open, yesterday's traders anticipate F will ascend beyond the 17 strike by the close on Friday, Feb. 21, when soon-to-be front-month options expire. From the stock's current perch at $16.60, that's a modest gain of 2.4%. If Ford does not topple that mark, the most the speculators have on the line is the initial premium paid.

Technically speaking, the automaker was last seen trading above $17 on Dec. 3, but sunk about 3% during the course of the session on profitability concerns linked to excessive discounting. Taking another step back, F shares have underperformed the broader S&P 500 Index (SPX) by about 10 percentage points during the last 60 sessions.

On the fundamental front, Ford Motor Company (NYSE:F) received some good news this morning, with December car registrations up 19.1% in December. Things get even busier later this month, as the automaker reports fourth-quarter earnings before the open on Tuesday, Feb. 28, and reaches its ex-dividend date the following day. Although Ford has topped analysts' bottom-line estimates in seven of the last eight quarters, the stock has also shed an average of 0.5% in the week subsequent to its earnings report.


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