Ford Investors: New Options Available for May Expiration

Investors in Ford Motor Co. (Symbol: F) will notice new options now available for the May 30 expiration. At Stock Options Channel, our YieldBoost formula analyzed the F options chain for these new contracts, spotlighting one put and one call contract of particular significance.

Put Contract Insights

The put contract with a $9.00 strike price currently has a bid of 50 cents. If an investor opts to sell-to-open this put contract, they are agreeing to purchase Ford stock at $9.00, while also collecting the premium. This arrangement effectively lowers the cost basis of the shares to $8.50 (excluding broker commissions). For an investor looking to buy shares of F, this strategy offers an appealing alternative to paying the current market price of $9.07 per share.

The $9.00 strike price is roughly a 1% discount to the current trading value, meaning it is slightly out-of-the-money. Current analytics indicate a 57% chance that this put contract could expire worthless. Stock Options Channel will monitor the likelihood of this outcome and post updates on our website, including a chart detailing these odds. Should the contract expire without value, the premium would yield a 5.56% return on the cash commitment, or an annualized rate of 40.56%, a metric we label as YieldBoost.

Historical Context of Trading

Below is a chart illustrating the trailing twelve-month trading history for Ford Motor Co., with the $9.00 strike price marked for clarity:

Call Contract Considerations

On the other side of the options chain, the call contract featuring an $11.00 strike price has a current bid of 3 cents. If an investor buys shares of F at today’s price of $9.07 and sells-to-open this call contract as a covered call, they are agreeing to sell the stock at $11.00. When considering the premium collected, this strategy could yield a total return of 21.61%, assuming the stock is called away at the May 30 expiration (not accounting for any dividends or broker commissions). However, if Ford shares experience significant price gains, potential upside may be limited, making it essential to review the company’s trailing twelve-month trading history and fundamentals.

The chart below depicts Ford’s trading history, highlighting the $11.00 strike price in red:

It’s important to note that the $11.00 strike price represents a 21% premium to the current trading value, making it also out-of-the-money by this margin. Data suggests an 84% probability that this covered call contract may expire worthless, allowing the investor to retain both their shares of stock and the premium collected. Over time, Stock Options Channel will track these odds, sharing updates and charts on our website. If the covered call contract expires without value, the premium would add a 0.33% boost to the investor’s return, equivalent to an annualized rate of 2.41%, which we also refer to as YieldBoost.

The implied volatility for the put contract stands at 53%, while the call contract shows 46% volatility. In contrast, our analysis of actual trailing twelve-month volatility, based on the last 251 trading day closing values and today’s price of $9.07, indicates a volatility rate of 39%. For more options contract ideas worth considering, visit StockOptionsChannel.com.

Top YieldBoost Calls of the S&P 500 »

Also see:

• Funds Holding SPTB
• MTGE market cap history
• Funds Holding WWOW

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