Ford Stock Looks To Reverse Ugly Post-Earnings Trend

Ford short sellers may be hedging with call options before earnings

Managing Editor
Apr 24, 2018 at 2:25 PM
facebook X logo linkedin

Ford Motor Company (NYSE:F) will be the first car company to step up to the plate this earnings season, with the Detroit-based automaker scheduled to report first-quarter earnings after the close Wednesday, April 25. Ahead of the event, options activity has been bullish, despite the stock's troubling post-earnings history.

Ford stock has produced a negative earnings reaction in six of the last eight quarters. In January, the stock dropped 4% the day after earnings, and gave back 1.1% following its report last April. In the last two years overall, the equity has averaged a 3.1% move the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 4.8% one-day move, per implied volatility data.

Looking closer at the charts, Ford stock has already shed almost 11% in 2018, and at last check was down 0.4% to trade at $11 today. After hitting an annual high of $13.33 on Jan. 16, the shares pulled back to near the $10 level, and recent breakout attempts have been thwarted by the 200-day moving average.

Ford Stock Chart

The options pits paint a bullish picture, though. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 4.60. Not only does this show that bought calls have outnumbered puts by a nearly 5-to-1 ratio, but the reading ranks 3 percentage points from a 52-week high, pointing to a healthier-than-usual appetite for bullish bets of late.

Digging deeper, the weekly 4/27 11.50- and 12-strike calls saw notable increases in open interest during this time frame. According to data from the major options exchanges, most of the activity at these strikes has been of the buy-to-open variety. But considering how far out of the money these calls are, and the fact that short interest rose 16.4% in the previous two reporting periods, some of this activity could be from short sellers using options to hedge against a post-earnings rally.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI