Ford Motor Company (F) Options in Focus On Trump Tweet

Call volume is accelerated following Trump's tweet on Ford Motor Company (NYSE:F) Louisville, Kentucky, plant

Nov 18, 2016 at 1:25 PM
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Shares of Ford Motor Company (NYSE:F) were trading slightly higher earlier, following conflicting statements about the Detroit car maker's assembly plant in Louisville, Kentucky. While President-elect Donald Trump -- who has targeted the firm before -- tweeted that he "worked hard with [Ford Executive Chairman] Bill Ford to keep the Lincoln plant in Kentucky," Ford Motor said in a statement it "confirmed with the President-elect that our small Lincoln utility vehicle made at the Louisville Assembly plant will stay in Kentucky." Regardless, F stock has reversed course, dropping 0.8% to $11.78, and its options pits are bustling, with calls trading at roughly two times what's typically seen at this point in the day.

Drilling down on the action, roughly 77% of the 38,848 calls that have traded today have centered at F's November 12 and January 2017 12.75 strikes. While it's not entirely clear how these bets are lining up, it looks as if one speculator may have bought to close the front-month November 12 calls ahead of tonight's expiration, and rolled the short bet up and out to the January 2017 12.75 calls. 

From a wider sentiment perspective, put buyers have held the upper hand in F's options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, traders have bought to open 36,742 puts in the past 10 sessions, compared to 29,028 calls. What's more, the resultant put/call volume ratio of 1.27 ranks just 11 percentage points from a 52-week peak.

Regardless of whether it's call or put players, now appears to be an opportune time for premium buyers to strike on F. The stock's Schaeffer's Volatility Index (SVI) of 24% ranks lower than 81% of all comparable readings taken in the past year, indicating low volatility expectations are currently priced into the security's short-term strikes -- a potential boon to options buyers.

Technically, it's been a tough road for shares of Ford Motor Company (NYSE:F) this year, with the stock down 16.5% year-to-date. More recently, the security took a bounce off familiar support in the $11.10 region, although the subsequent rally ran out of steam near $12.45-$12.50. This region served as a ceiling for F stock in early October, and coincides with a 38.2% Fibonacci retracement of the equity's November 2015 high and February low.

F daily chart since november 2015

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