The year 2021 was a blockbuster year for Ford. Its stock has steadily topped 20-year-highs after doubling production capacity for its electric vehicle “F-150 Lightning” for the second time in four months. It seems that everybody wants this car which is good for Ford. Maybe that’s is the reason for the latest uptrend in the stock – the increasing confidence of investors. With the long signal which was generated a couple of days ago, we can now give this one a try and open a position by selling put options. Check it out, folks.
Disclaimer:
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. The information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.
Type of a trade: Cash secured put
Alternatively: Bull put spread
Expiration: 18th March 2022 (790 days)
Strike: $24
Premium for 1 option: between $180 and $187 on the day this article was published
Margin: apprx. $320 on the day this article was published (Please keep in mind: the margin size depends on your account size. The smaller your account size the higher the margin requirements. The margin I’m publishing here is the margin based on my account size. Therefore, it could also happen that with a small account, you would see a margin of more than $2000)
Pros for this trade:
– Based on the signal I get (ADX-Indicator), the price should continue to move at least sideways and to stay above the strike so we can get rid of the put option when the time is right
– Good fundamentals could support the price of this stock and keep it above the strike
– Moderate Fear & Gear index of 53 reduces the risk of a crash in the next weeks which is supportive for the price
– An IV Rank of around 38 might still not be ideal but an IV Percentile of around 91% is an excellent value and showing us that the current implied volatility of F is actually not bad.
Cons for this trade:
– F pays currently a dividend of just 1.65% which is far beyond of what I call a great dividend (Source: finviz.com). In case the price would fall below the strike and you would get the stock assigned, the waiting time wouldn’t be as sweet as with another stock, e.g. UNM where you get around 4%
– As trading with options is also a dealing with probabilities, every of my assumptions could turn out as a wrong estimation so at the end the stock would land in the money and you would close the position with a loss in case you don’t want to keep the stock
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Result of this trade: t.b.a.
Realized profit for 1 option: t.b.a.
Days in the trade: t.b.a.
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