Ford has been trending steadily higher in the last month, handing large profits to bullish option traders.
On Aug 25, Investitute’s market scanners found that 14,900 Weekly $11 calls expiring on Oct. 6 were purchased in one print for $0.24 against open interest of 476 contracts. Stock 10.81. Monthly sales due 9/1, EPS 10/26 before open.
Those calls sold for $0.81 today, more than triple their original price. The stock rose 9.1 percent in the same time frame, showing how options can far outperform their underlying shares. It was the second winning call trade in Ford posted on Investitute in the last three weeks.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
F was off a penny at today’s close at $11.71. The auto maker has been trending higher since the twin hurricanes in the Southeast, where car losses have been estimated to exceed 500,000 in Texas alone. Ford is scheduled to report earnings on the morning of Oct. 26.