Unusual Options Activity: Ford (F)

Shares of car manufacturing giant Ford (F) have been doing well this year. One trader sees that trend continuing well into the next year.

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  • That’s based on the June 2022 $22 calls. The trade has 336 days left until expiration. Over 6,200 contracts traded against a prior open interest of 320, for a 19-fold rise in volume. Based on where shares last traded in the low $14 range, the stock price would need to surge over 54 percent to move in-the-money.

    The buyer of the options paid about $0.52 for a contract.

    The carmaker has seen shares rally strongly this year as the company has unveiled electric and hybrid versions of its popular cars, eating into the market share of pure-play EV firms.

    Strong earnings have led to shares trading at about 15 times earnings, even after a 114 percent rise in the past year.

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  • Action to take: Investors may like shares here to play the rise of electric vehicles by owning shares of a firm with over a century of history in the automotive market. Shares don’t currently pay a dividend, but it would be the least leveraged way to play shares.

    Traders may like the call options, as their low price could result in a potential triple-digit return if the rally in shares continues. The option has plenty of time to play out for those returns.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may make a trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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