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Ford Motor Company (NYSE:F) is trading 0.3% higher this afternoon to perch at $17.24, following news that the automaker acquired software company Livio for less than $10 million, in an effort to ramp up its in-car connectivity features. Meanwhile, put activity has accelerated on the security yet again, as approximately 23,000 contracts have switched hands thus far -- almost double the norm. By contrast, around 13,000 calls have been exchanged.
However, not all of this put volume has been bearish in nature. Most popular has been the December 15 strike, where close to 6,700 contracts have crossed the tape. This includes a large block of 4,595 puts that traded at the bid price for $0.20 each, suggesting they were sold. Since today's volume exceeds present open interest levels -- and implied volatility has ticked higher at this strike -- it's probable that new positions have been added here.
By selling the puts to open, the speculator is counting on F to stay above the $15 level through December expiration. This would render the options worthless, and allow him to retain the initial premium collected, which also represents the maximum reward for this play. The delta for these puts rests at negative 0.16, suggesting they have just a 16% chance of moving into the money ahead of the close on Dec. 20. Should the stock falter during this time frame, the seller could find himself on the hook to purchase the shares at $15 each, no matter how low F sinks.
On the technical front, Ford Motor Company (NYSE:F) has gained about 33% year-to-date, and roughly 72% during the past 12 months. What's more, the stock hasn't breached the $15 mark on a daily closing basis since June 25. Still, it bears mentioning that the firm is tentatively on tap to report third-quarter earnings between Oct. 28 and Nov. 1. Although the auto giant has bested consensus bottom line estimates in seven of the past eight quarters, the shares have gone on to trade an average of 0.9% and 1.7% lower the day and week after posting, respectively.
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