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Option Brief: Ford Motor Company (NYSE:F) is up 2.1% today to trade at $16.74, after Deutsche Bank lifted its price target for the stock to $22 from $19. Elsewhere, the auto giant announced plans to hire around 5,000 employees in 2014, while a separate statement noted that CEO Alan Mulally will remain at the company through next year. Not surprisingly, this bevy of headlines has bolstered F's call activity, as roughly 48,000 contracts have changed hands so far. This is almost double the norm, and about three times the number of puts traded.
Leading the pack is the December 17 call, which has seen about 13,000 contracts cross the tape -- the majority of them at the ask price, pointing to buyer-driven activity. Data from the International Securities Exchange (ISE) confirms that at least some of these calls were bought to open.
In this case, the speculators are hoping F will muscle north of $17 by front-month expiration. At last check, the delta for the call stood at 0.33, implying it has a nearly 1-in-3 chance of being in the money at the close on Dec. 20. Should the stock fail to move above the strike price over the next week or so, the call buyers will forfeit the initial cash outlay.
Although Ford Motor Company (NYSE:F) sports a year-over-year gain of almost 46%, the shares have faltered in recent months, shedding 7.4% since touching a near-three-year high of $18.02 on Oct. 24. On the fundamental front, the automaker said it will provide a year-end briefing on Wednesday, Dec. 18 -- just two days before front-month options expire.