Trader steps on gas with Ford calls

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Ford Motor rallied more than 800 percent off its 2009 lows before stalling in the spring, and now one investor is betting on further gains.

F Chart optionMONSTER's Heat Seeker tracking system detected the purchase of 150,000 September 12 calls for $0.41, matched against the sale of 75,000 September 14 calls for $0.09 and 75,000 September 15 calls for $0.05. The total cost was a debit of $0.27.

F rose 2.17 percent to $10.85 on Friday and has lost about one-quarter of its value since hitting a five-year high in late April. The company traded as low as $1.50 in March 2009 but then surged back after the credit market improved and a new vehicle lineup combined with a strong economy to drive sales.

The option trade is designed to capture another push to the upside and will earn a maximum profit of 266 percent if F closes at or above $16 on expiration. The strategy, known as a "Christmas tree," resembles a vertical spread but includes the sale of two different upside strikes.

The next scheduled event that could serve as a potential catalyst for the name is the release of July sales on Aug. 3.

The Christmas tree pushed total options volume in F to about five times greater than average. Calls accounted for a bullish 93 percent of the activity.

(Chart courtesy of tradeMONSTER)



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: F

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