Ford Motor is dropping along with the rest of the market today,
but one investor sees a bottom.
optionMONSTER's tracking systems detected heavy selling of the July
9 puts, which traded 13,696 times against open interest of 10,224
contracts. Most of transactions priced for $0.12 and occurred amid
a fit of bearish activity in the stock shortly after the open.
F fell 4.77 percent to $9.93 in morning trading and is down 15
percent in the last month. The automaker has been drifting lower
since mid-April after staging a huge rally off the 2009 market
lows, and yesterday closed below its 200-day moving average (purple
line on chart) for the first time in 15 months.
Today's put sale reflects a belief that F will stay above $9
through July 16. The strategy is common at this point in the
trading cycle because out-of-the money options lose value at an
accelerating pace as they near expiration.
The trader also targeted the contract with the highest implied
volatility, 56 percent, while F's overall implied volatility is 48
percent. If the market holds its ground and avoids further
significant downside, volatility will drop or stabilize, also
favoring the put seller.
Overall options volume in the stock is about 46 percent greater
than average so far today.
(Chart courtesy of tradeMONSTER)
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