Stocks quoted in this article:
There's been a growing demand for Ford Motor Company (NYSE:F - 11.46) calls in the options pits, per data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 10-day call/put volume ratio has risen to 5.96, from its 50-day call/put volume ratio of 3.35. Plus, this shorter-term ratio ranks in the 88th percentile of its annual range, indicating bullish bets have been initiated over bearish at a near annual-high clip in recent weeks.
This trend was continued in Thursday's session, where around 144,000 call contracts crossed the tape. Not only does this represent more than double the average daily volume for call options, but it was almost three times the number of puts that changed hands.
As Elizabeth Harrow pointed out yesterday, F's December 12 call was the most-active strike, seeing nearly 30,500 contracts trade. Additionally, the stock's February 12-strike call was popular among option players, with roughly 22,500 contracts crossing here. The majority at each strike traded at the ask price, implied volatility ticked higher, and open interest soared overnight -- all indications of buy-to-open activity.
By purchasing the December 12-strike call, traders expect F to rally above $12.10 (the strike plus the volume-weighted average price [VWAP] of $0.10) by Dec. 21, at which point the contracts will expire. Meanwhile, the initiators of the February 12-strike call will profit with each step north of $12.37 (the strike plus the VWAP of $0.37) F takes through February expiration. These breakeven levels represent a respective 5.6% and 7.9% jump from F's current price.
On the charts, F has added a modest 8% over the past 52 weeks. However, the stock has been on an impressive run of late, surging 30% since hitting a year-to-date low of $8.82 on Aug. 2. Additionally, the equity has found a solid layer of support from its 50-day moving average, which has contained all of F's recent consolidation attempts.
Fundamentally, the automaker is scheduled to unveil its November sales report on Monday. The company is projecting monthly sales in its hybrid division to be the best on record.
In today's session, the stock has pulled back 0.6%, and was last seen hovering near $11.46.