Why Ford Stock Could Get a Second Wind Soon

The automotive staple just toppled a key trendline

Mar 22, 2022 at 10:55 AM
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Auto maker Ford Motor Company (NYSE:F) is trying to find support at its June and October highs, after breaking back above the 10-day moving average, which appears to be heading north. The shares are also standing four times above their 2020 lows, making now a solid opportunity to bet on F’s next move higher. 

 

ford march 22

 

There is plenty of room for optimism among the brokerage bunch. Of the 11 analysts in coverage, seven say "hold" or worse, while the remaining four call F a "buy" or better. The security could keep moving higher if some of this bearish sentiment starts to unwind.
 
At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), F’s 50-day put/call volume ratio sits higher than 80% of readings from the last year. This indicates puts have been picked up at a much quicker-than-usual clip over the past two months. While this indicator does not have a strong record, Ford’s shift towards the electric vehicle (EV) market could lead to a shift in sentiment, which may create additional tailwinds for the shares.
 
It’s also worth noting Ford stock's Schaeffer's Volatility Scorecard (SVS) sits at 95 out of 100, meaning the equity has exceeded option traders' volatility expectations during the past year.
 
What’s more, the equity's implied volatility (IV) now runs in-line with its historic volatility (HV), despite continuing to fall in intraday trading -- last seen around the 42nd annual percentile. Plus, the 15- and 16- strike puts could be supportive, excluding March.
 
Lastly, our recommended call has a leverage ratio of 4.59, and will double in a 20.46% pop in the underlying shares.
 
Subscribers to Schaeffer's Weekend Trader options recommendation service received this F commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
 




 
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