Ford Motor Company (F) Option Bear Eyes an Extended Slide

Ford Motor Company's (NYSE:F) May 14.50 put is popular today

Apr 28, 2015 at 12:07 PM
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A first-quarter profit miss has shares of Ford Motor Company (NYSE:F) down about 0.6% at $15.81, a slimmer post-earnings move than the options market had predicted. Meanwhile, in the options pits, put volume has soared to two times what's typically seen at this point in the day, with one speculator rolling the dice on an extended post-earnings slide over the next few weeks.

Specifically, one multi-exchange sweep of 7,844 May 14.50 puts was bought to open earlier for $31,376 (number of contracts * $0.04 premium paid * 100 shares per contract). This is the most the speculator stands to lose, should F maintain its perch atop $14.50 through the close on Friday, May 15 -- when front-month options expire. Profit, meanwhile, will accumulate on a move south of the at-expiration breakeven mark of $14.46 (strike less premium paid).

Broadly speaking, put buying has been popular on F in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.42 ranks higher than 98% of similar readings taken in the past year. In other words, puts have been bought to open over calls at a near-annual-high clip.

This skepticism among option traders isn't too surprising, considering F's lackluster showing on the charts. Since hitting its year-to-date high of $16.74 on March 23, for example, the stock has given back 5.6%. Additionally, Ford Motor Company (NYSE:F) has found a stern layer of resistance at its 32-day moving average -- a trendline that helped usher the shares higher in February and early March, but has more recently served as a ceiling.


 

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