F stock has closed lower post-earnings in six of the last eight quarters
Car maker Ford Motor Company (NYSE:F) is set to report second-quarter earnings tomorrow morning, and investors are keeping an eye trained on the automobile giant, which lately has struggled post-earnings. The car giant could be under even more scrutiny tomorrow, given rival General Motors reported earnings today. Below, we will take a look at Ford stock, and see how F options traders are positioning themselves ahead of the scheduled event.
F stock is up 0.4% to trade at $11.33 today. Since touching a four-year low of $10.67 on May 17, Ford stock has made notable headway. However, the shares have struggled to break north of the $11.80 level -- where F stock landed after a sell-off in mid-March, and home to the equity's descending 200-day moving average. This trendline has been conspiring with its 320-day cohort to lead Ford stock to lower highs since 2015.
Historically speaking, Ford stock has averaged a one-day move of 3.1% in either direction in the session following its last eight earnings releases. As far as direction, F stock has dropped after the last four earnings, and has found itself in the red following six out of the last eight releases. This time around, the options market is betting on a wider-than-usual 4.5% swing in either direction for Thursday's trading, based on the stock's at-the-money implied volatility data.
Put buying has been in vogue for some time now, ramping up to near annual highs during the past 10 weeks. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), F stock's 50-day put/call volume ratio of 1.05 ranks in the 97th percentile of its annual range. Given Ford's shaky earnings history, options traders may be expecting a continued drop from F shares.
Heading into tomorrow's report, 1.1 million put contracts are currently open -- in the 79th annual percentile. That's compared to call open interest in the 35th percentile of its annual range, with just over a million contracts outstanding. Still, Ford's 30-day implied volatility skew of 10.7% ranks in just the 25th percentile of its annual range. This indicates F put options have rarely been less expensive, compared to calls.