Call Traders Cruise Toward Ford Stock Ahead of Earnings

Ford is set to report second-quarter earnings after-the-close this Thursday

Lillian Currens
Jul 27, 2020 at 3:05 PM
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With earnings season well underway, many options traders are speculating on stocks ahead of their quarterly reports. Thanks to data courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, we have a list below comprised of 20 stocks that have attracted the highest weekly options volume over the last 10 trading days, with new additions highlighted in yellow. One stock to make the list ahead of its earnings event is Ford Motor Company (NYSE:F). The automaker is due to post its second-quarter results on Thursday, July 30, after the close. 

While Ford stock hasn't staged the impressive rebound that some of its sector peers have enjoyed, it is up 34% in the last three months. Overhead pressure at the 180-day moving average has stymied the breakout attempts; the trendline rejected two separate rally attempts during the past couple of months. Nevertheless, support has emerged at the shares' 60-day moving average, which provided a springboard for their mid-July pullback.

Ford Chart July 27

Options traders seem to be betting on this underlying support as well. White's table shows 426,332 calls being exchanged in the past 10 days, compared to 101,961 puts. The weekly 7/17 7-strike call was the most popular position during this time period, with 52,203 contracts exchanged. 

Most Active Options July 27

This bullish bias among options traders is unusual. This is per Ford's 10-day call/put volume ratio of 5.99 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 96th percentile of its annual range. This suggests a much healthier-than-usual appetite for long calls of late.

A look at today's trading shows 48,000 calls and 15,000 puts across the tape so far. The most popular by far is the September 9 call, and trailing behind is the weekly 7/31 7-strike call. 

The looming earnings date has not affected the price of these contracts, which are still relatively cheap. Ford's Schaeffer's Volatility Index (SVI) of 56% stands higher than just 21% of readings from the past 12 months, meaning options players are pricing in relatively low volatility expectations at the moment. 

Meanwhile, Ford's post-earnings history should give bullish investors pause. The stock was lower the session after its last four reports, averaging a drop of 6.5% during this 12 month span. This time around, the options market is pricing in an 8.1% swing, regardless of direction. 


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