Options Bulls Target Ford Stock After Electric Vehicle Update

An unwinding of analyst pessimism could propel Ford stock higher

Assistant Editor
Mar 2, 2022 at 10:15 AM
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Ford Motor Company (NYSE:F) is up 6.5% to trade at $17.75 at last check, after announcing plans to reorganize its operations in an effort to streamline its electric vehicle (EV) business. Digging deeper, the company will separate its EV and internal-combustion businesses, a move that Ford's CEO Jim Farley called "one of the biggest changes in our history." The company plans to release financial results for the new units by 2023.

Options bulls are targeting Ford stock following the news. So far, 163,000 calls have exchanged hands, which is three times the intraday average, and well above the 41,000 puts traded. The two most popular contracts are the weekly 3/4 18- and 19-strike calls, where new positions are being bought to open.

This penchant for calls is unusual, given options traders have favored puts recently. In fact, F's 50-day put/call volume ratio over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 99% of readings in its annual range, indicating puts have been picked up at a faster-than-usual clip in the last 10 weeks.

Speculating with options could be the way to go, as Ford stock's Schaeffer's Volatility Scorecard (SVS) sits at an 88 out of 100. This implies that the security has exceeded options traders' volatility expectations during the past year.

An unwinding of analyst pessimism could provide additional tailwinds for Ford stock. This is per the seven analysts that still rate F a "hold" or worse, against four "strong buy" ratings. Meanwhile, the 12-month consensus price target of $21.60 is a 21.5% premium to current levels.

Since hitting a Jan. 13, all-time high of $25.87, Ford stock has struggled with pressure from the 20-day moving average. The equity has also had two close calls with the long supportive 200-day moving average, though it managed to close above the trendline in both instances. Year-to-date, F is down 14.6%.

 




 
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