Unusual Options Activity: Ford Motor Company (F)

Automaker Ford Motor Company (F) has seen shares decline about 15 percent over the past year. One trader sees a further decline ahead.

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  • That’s based on the June 9 $11 puts. With 21 days until expiration, 14,140 contracts traded compared to a prior open interest of 495, for a 29-fold rise in volume on the trade. The buyer of the puts paid $0.28 to make the bearish bet.

    Shares recently went for just over $11, making this an at-the-money trade. Shares are close to their 52-week low of $10.61, and over the past year the stock has tended to bounce higher after dropping to the low $11 range.

    That may change on the next re-test of the low, as the automaker has reported losses over the past two quarters. Plus, automakers tend to be cyclical to the economy, which has showed signs of slowing.

    Action to take: Shares are reasonably valued at less than 8 times forward earnings. But rising interest rates are impacting car sales and leases, and a further slowdown looks likely. Interested investors may want to wait until shares start trending higher before buying,

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  • For traders, the June puts could play out well with a market decline in the coming weeks. Add in the current downtrend for Ford, and they look like an inexpensive way to make a quick mid-double-digit return.


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