Morgan Stanley is Buying the Ford Stock Pullback

Call buying has remained popular on Ford

Aug 6, 2019 at 10:42 AM
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The shares of Ford Motor Company (NYSE:F) are up 1.7% at $9.40, after Morgan Stanley raised its opinion to "overweight" from "equal weight" and lifted its price target to $12 from $10. The brokerage firm believes the automaker's restructuring efforts are paying off and its fears about a dividend cut have diminished. What's more, the analysts added that F stock is trading at a discount to sector peer General Motors (GM).

This upgrade comes after Ford gapped lower in mid-June, and yesterday notched a fifth straight loss and touched its lowest point since early April. The bull note seemingly came at an opportune time, since F may have been due to bounce anyway. Specifically, the 14-day Relative Strength Index (RSI) was right at oversold territory at last night's close, coming in at 30.

In the options pits, call buying has remained popular at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Not only have long calls almost quadrupled puts during the past 10 days at these exchanges, but the Schaeffer's put/call open interest ratio (SOIR) right now is 0.69, and ranks in the 28th annual percentile, showing an unusual call-skew among near-term contracts.

Among short-term contracts that have been popular, there's notable open interest at the September 11 call, where almost 112,000 options are open. The 10 call from the same series has also been popular. Overall, open interest is relatively low right now, ranking in the 8th annual percentile.

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