Ford Motor Company (F) Call Buyers Climb On for the Long Haul

Ford Motor Company's (NYSE:F) March 15 call has been unusually popular of late, with most of the action at the hands of buyers

Dec 8, 2016 at 11:48 AM
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Ford Motor Company (NYSE:F) has been heavily targeted by options traders in recent weeks, with speculators showing particular interest in calls over puts. Per data from Schaeffer's Senior Quantitative Analyst Rocky White, 690,274 calls have traded on F in the past two weeks, compared to 204,659 puts. This theme is echoed in Ford stock's top-heavy 10-day call/put volume ratio of 1.64 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the elevated 66th annual percentile. Simply stated, calls have been bought to open over puts at a faster-than-usual clip.

Diving deeper, F's March 15 call has seen the biggest rise in open interest over this two-week time frame, with 210,746 contracts added. In fact, this out-of-the-money strike is now home to F's top open interest position, with nearly 245,000 contracts outstanding. As a point of comparison, the automaker's next largest open interest position is the January 2017 14.75-strike call, where 150,557 contracts currently reside.

According to Trade-Alert, the bulk of the activity at the March 15 call occurred yesterday, Dec. 7, and was a result of speculators purchasing new positions. Specifically, 211,466 March 15 calls traded on Wednesday -- 207,942 of which translated into open interest overnight -- with 98% going off at the ask price. This strike is F's most active option in today's trading, too, with 3,809 contracts on the tape at last check. However, given the lofty levels of open interest here, it's hard to tell whether traders are opening or closing positions today.

Looking at the charts, F hasn't seen the north side of $15 since October 2015. And while the stock has added nearly 18% since hitting its most recent low of $11.07 on Nov. 9. it still remains down 7.5% year-to-date to trade at $13.04. Regardless of where the shares of Ford Motor Company (NYSE:F) settle at March options expiration, though, the most the recent batch of call buyers stand to lose is the initial premium paid.

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