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Ford Motor Company (F) Put Activity Spikes Amid Overseas Sales News

Option bears descend upon F in droves

by 12/17/2013 1:31 PM
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Option Brief: Ford Motor Company (NYSE:F) is trending 1% lower today to hover at $16.69, amid reports that the automaker's European car sales fell by 2.9% in November. This drop may have sparked a wave of bearish options activity, as approximately 113,000 puts have switched hands so far. This is more than eight times the equity's expected intraday volume, and more than double the number of calls exchanged.

The lion's share of the action has occurred at the December 16.50 strike, where roughly 47,600 puts have crossed the tape -- the majority of them at the ask price, pointing to buyer-driven transactions. Meanwhile, today's volume at this strike has exceeded current open interest levels, and implied volatility has surged 10.4 percentage points, signaling the creation of new bearish bets. Data from the International Securities Exchange (ISE) also corroborates this theory.

In this scenario, the put buyers are hoping F will retreat south of $16.50 by this Friday's closing bell. This denotes a drop of just 1.1% from the security's present perch. However, should the shares continue to tread water above the strike price over the next few days, the traders will simply forfeit the premium paid for their long positions.

Fundamentally speaking, Ford Motor Company (NYSE:F) is on deck to conduct a year-end briefing tomorrow morning. This suggests that some of today's pessimistic speculators are hoping for a negative update from the firm, which could pressure the equity even lower ahead of front-month expiration at the end of the week.


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