Long-Term Call Traders Drop Big Bucks on Ford

Call buying continues to be popular for Ford

Dec 2, 2019 at 3:07 PM
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Ford Motor Company (NYSE:F) is one name seeing notable options trading today. More than 75,000 calls have traded, compared to a daily average of just 34,000, due to some major trades at the January 2021 10-strike calls. Trade-Alert is suggesting a block of 43,627 contracts were bought to open for 57 cents each, which would mean a bull bet almost $2.5 million (premium paid * 100 shares per contract * contracts purchased).

This trader will stand to profit if the auto stock moves above $10.57 (strike + premium paid) over the next 13 months. Call buying has long been the most common strategy from Ford options traders, as the 10-day call/put volume ratio of 1.81 actually ranks near the bottom third of annual readings. So while call buying has nearly doubled put buying in the last two weeks, such interest in long calls isn't rare.

While these traders are opening LEAPS, data suggests near-term contracts are attractively priced at the moment. For instance, the 30-day at-the-money implied volatility of 21.7% ranks in the 5th annual percentile.

Looking closer at Ford's chart, the shares are seemingly finding a foothold near the $9 mark, as they try to create some distance between themselves and their 50-day moving average, a trendline they've been following since September. The stock has underperformed the broader S&P 500 Index (SPX) by 8 percentage points in the past three months.

ford stock dec 2xx

 

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