New Trading Opportunities in Ford Options Market

Investors in Ford Motor Co. (Symbol: F) will notice new options available for trading today, with a December 6th expiration date. At Stock Options Channel, our YieldBoost formula has identified intriguing contracts among the new December 6th offerings, featuring one put and one call that stand out.

Intriguing Put Option at $11.00 Strike

The put contract at the $11.00 strike price currently has a bid of 57 cents. By selling-to-open this put, an investor agrees to buy the stock at $11.00 while also collecting the premium. This results in a cost basis of $10.43 per share (excluding broker fees). For those planning to buy Ford shares, this could be a more appealing option than purchasing at the current market price of $11.13 per share.

Notably, the $11.00 strike price offers approximately a 1% discount relative to today’s trading price, indicating it is out-of-the-money by that same percentage. Market analytics suggest there is a 55% chance this put contract could expire worthless. Stock Options Channel will monitor these odds over time and provide updates on our website. If the contract does expire worthless, the premium represents a 5.18% return on the cash commitment or an annualized return of 43.94%, a metric we refer to as the YieldBoost.

Analyzing the Trading History

Below is a chart displaying the trailing twelve-month trading history for Ford Motor Co., with the $11.00 strike price highlighted in green:

Attractive Call Option at $11.50 Strike

On the call side, the contract at the $11.50 strike price has a current bid of 39 cents. If an investor buys Ford shares at the current price of $11.13 and sells-to-open this call contract as a “covered call,” they commit to selling at $11.50. This position could yield a total return of 6.83% if shares are called away by December 6th, not including any dividends. However, significant gains could be missed if the stock price increases substantially. Therefore, reviewing Ford’s historical trading data and understanding business fundamentals is crucial.

A chart illustrating Ford’s trailing twelve-month trading history with the $11.50 strike price marked in red is provided below:

The $11.50 strike represents an approximate 3% premium over the current trading price of $11.13, signifying it is also out-of-the-money by that percentage. There is a 57% chance the covered call contract could expire worthless, allowing the investor to retain both their shares and the premium collected. If that occurs, the premium would represent an additional 3.50% return for the investor or 29.71% annualized, another example of the YieldBoost concept.

Volatility Metrics

The implied volatility for the put contract is recorded at 43%, while the call contract shows an implied volatility of 40%. In comparison, the actual trailing twelve-month volatility, based on the last 251 trading days and today’s price of $11.13, is calculated to be 39%. For further options contract ideas worth exploring, please visit StockOptionsChannel.com.

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