Here is how it seems to be set up to go. How it all turns out might surprise you. We are expecting a slightly weak opening on the price on Ford's stock price this morning and on the D.J.I.A. index. Yes there is fresh news on the Ford Motor Company before the opening. They have announced yet another recall. This time it's for "wiper blade" issues on over 400,000 vehicles. That number is not a typing error. At least it's not a recall for engine or transmission problems. In an odd sort of way this news will help to get past customers back into their showrooms for like thirty minutes or so. The recall should be a quick, one time fix. It's still however going to cost them massive headaches to organize and millions of dollars. What an inconvience for a large number of drivers.
Look at these two premarket readouts, the second one at 9:00 a.m.
Can you see Ford's stock price trading down in the premarkets?. The question is how much will the 11.5 series of Calls drop in price?.
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Shown above are the 11.5 series of Calls that expire in four trading sessions (on Friday). They closed yesterday at $.21 cents per contract and are "in-the-money" by $.11 cents based on the the stocks closing price. It would now cost you $21.00 dollars or slightly less, plus commissions to purchase one contract. Many traders will purchase quantities of twenty-five or fifty contracts at any one time. Given this morning's expected weak opening the cost of these Calls will be coming down. Might this recall news be quickly discounted? That's the hope of new Call option players willing to jump in. Sorry about the bad luck existing Call option holders. There also are rumors that Ford is thinking of repurposing one of their idled plants to build products that complement the needs of Ai industry. Here is it's five day chart which looks somewhat perky. Monthly production numbers also came out just a few days ago which in part reflect this perkiness. The release of these numbers is always an event it itself.
Let's skip forward to the end of the day's trading session.
Notice the drop in price to $10.00 a contract and then a rebound to a high of $24.00 a contract.That was the bounce traders were hoping for. It was the "recall news" that put a scare into things on the opening to help make it all happen. Here is how it traded on the day.
These next two printouts show this movement even better.
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Are you able to see when it dropped down to $.10 just after the opening. One of the reasons I find value with trading Ford options is that every month the company reports their production numbers and these reports influence which way the stock is then going to move. When you add to this equation things like the random recall news we had this morning you can build a good case for how the stock could react. You have to learn when the best times are to chase this action. The stock afterall is sometimes known can to trade aimlessly for weeks on end. That is part of the aggravation of tracking this stock. It should also be pointed out that there is yet another subsection of traders who are exclusively focused on trading it's one and two year out Call and Put options knowing that options on stocks in this price range offer excellent leverage. A stock price move of let's say $2.00 per share over such periods of time would have a massive impact on the pricing of these options. The discussion of the merits of trading longer term Call and Put options on Ford is another blog for another day! ** April 8th, the next day. The Ford 11.5 series of Calls powered up again.
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