Markets

Bulls are taking the wheel at Ford

Ford has pulled back, and the bulls want to drive the stock higher into the New Year.

optionMONSTER's Heat Seeker system detected heavy activity in the short-term calls expiring Friday, Jan. 3. More than 55,000 contracts were purchased at the 17 strike, most of which priced for $0.17 and $0.19. Volume was more than 28 times previous open interest, demonstrating that new money was put to work.

These long calls lock in the price where shares can be purchased in the auto maker, letting investors cheaply position for a move higher. The options also have the ability to generate significant leverage if a rally unfolds. (See our Education section)

F declined 0.73 percent to $16.41 yesterday and has been holding support around the same level where it bounced in October. It's been lagging rival General Motors despite strong results as investors worry that CEO Alan Mulally might jump ship in coming months.

Total option volume in Ford was triple its daily average yesterday, with oveall calls outnumbering puts by more than 4 to 1.

Disclosure: I am long F.

(A version of this post appeared on InsideOptions Pro yesterday.)

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

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


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

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