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Most Active Options Update: Ford Motor Company (F)

One speculator bets on minimal movement for F in the near term

by 9/24/2013 3:02 PM
Stocks quoted in this article:

The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past five trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are Ford Motor Company (NYSE:F), Facebook Inc (NASDAQ:FB), and Las Vegas Sands Corp. (NYSE:LVS).

Another day, another new record high (and upgrade) for FB. Earlier, the stock tagged the $49.66 mark -- just a hair's breadth from the $50 level -- prompting option traders on both the call and the put side to target this round-number mark in the weekly 9/27 series. Also hitting a notable milestone today is LVS, which ran to $66.50 -- its loftiest perch since June 2008. Not surprisingly, calls are flying off the shelves, trading at more than four times the average intraday volume. Elsewhere, here is a quick look at the interesting activity in F's options pits.


Ford Motor has had a standout year, with the shares up nearly 68% over the past 52 weeks to trade at $17.32. It appears as though one speculator in today's session is betting on a breather for the stock, though, by initiating a short straddle in the back-month series. Shortly after lunchtime, two matching blocks of 10,000 contracts changed hands at the November 17 call and put. Both legs crossed at the respective bid prices of $0.86 and $0.55, creating a net credit of $1.41 per pair of contracts.

Ideally, F will finish right at $17 at the close on Nov. 15, allowing the sold options to expire worthless, and the trader to retain the initial credit collected as her full potential reward on the play. However, she still stands to profit as long as F remains between the breakeven rails of $15.59 and $18.41 (strike price, less/plus net credit). Looking at the charts, F hasn't traded south of the former since early July, nor has it moved north of the latter since January 2011. Should the stock make a major move ahead of November expiration, losses are theoretically unlimited to the upside, and could be quite substantial to the downside.

Expanding the scope reveals that option players have been upping the bearish ante toward Ford Motor Company (NYSE:F) in recent weeks. However, as my colleague Andrea Kramer noted yesterday, given F's withstanding technical prowess, this could just be indicative of shareholders scooping up some options-related insurance.


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