Traders Driving up Call Volume on Ford (F)

10/16/2009 12:01 am EST

Focus: OPTIONS

Nick Perry

Equity Options Trader, Schaeffer's Investment Research

Call volume has been unusually heavy on Ford Motor Company (F) during the past week. Within this time frame, traders on the International Securities Exchange (ISE) have bought to open 38,254 calls on F, compared to just 3,269 puts. In other words, speculators have snapped up 11.70 times more bullish bets than bearish during the past five days.

F price chartThis reading is noticeably higher than Ford's ten-day ISE call/put volume ratio, which currently stands at 5.32. This ratio ranks higher than 64% of other such readings taken during the past year, confirming that traders have had a greater appetite than usual for call options on the automaker.

Elsewhere, short sellers have been rushing for the exits. Short interest on Ford dropped by 14.2% during the most recent reporting period, and these bearish bets now account for just 3.1% of the stock's available float. In this context, it's possible that the remaining shorts are hedging their bets with long calls on Ford.

Meanwhile, on the charts, F recently pulled back to support at its ten- and 20-week moving averages. The stock is now attempting to push through short-term pressure in the $8 neighborhood and extend its year-to-date surge of nearly 233%. During the coming weeks, a continuation of the recent short-covering trend could be a boon to the shares.

By Nick Perry of Schaeffer’s Trading Floor Blog

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