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Most Active Options Update: Ford Motor Company (F)

Ford Motor Company option trader forecasts a longer-term floor

by 1/24/2014 2:58 PM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is Ford Motor Company (NYSE:F).

Most

Ford Motor Company is struggling today, with the shares off 3.8% to churn near $15.81. This only highlights the equity's recent technical troubles, though, with the stock tumbling roughly 6% since hitting its year-to-date high of $16.78 last Friday. What's more, last week's rally attempt was quickly contained by Ford Motor's 32-week moving average -- a trendline the equity has been wallowing beneath for six consecutive weeks.

Amid today's drop, put volume is running at a 59% mark-up to average intraday levels; however, not all of the day's activity is of the traditional bearish sort. Specifically, one large block of 6,000 May 14 puts changed hands this afternoon at the bid price of $0.26. Implied volatility ticked higher at the transaction, volume outstrips open interest, and data from the International Securities Exchange (ISE) via Trade-Alert confirmed the position was sold to open.

By selling the puts (to open), the speculator expects F to maintain its perch north of $14 through the close on Friday, May 16. In this best-case scenario, the puts will expire worthless, and the trader can pocket the initial credit collected as her full potential reward. If Ford maintains its current trajectory over the next four months, and breaches the $14 level, the put seller will likely be assigned, and be obligated to buy the shares at the strike price, regardless of where the stock may be trading.

On the fundamental front, Ford Motor Company (NYSE:F) is on tap to unveil its fourth-quarter earnings report ahead of next Tuesday's open. Analysts are calling for a profit of 29 cents per share -- a 2-cent drop from its year-ago results.


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