The Ford Motor Co. (F) calls I recommended look even stronger than I initially suspected. Great. In the run up to the big tariff announcement, F traded well above $10 roughly every other day in the last five-to-six weeks. So, there’s plenty of historical precedent that we can hit that price again at least once in the coming month, writes Hilary Kramer, editor of High-Octane Trader.
The 200-day trend is still up at a healthy $10.10. Admittedly, a lot of those data points happened before the trade war came to Detroit’s doorstep. But then again, Ford traded between $9.50 and $10.50 in early November, so it’s not like the election results were an immediate negative factor here.
Ford Motor Co. (F)
Data by YCharts
I figured Ford would ride to glory in an era where everyday Americans buy American trucks. It’s held up fairly well: Down 8.5% since the election. But the real thrill is the possibility that President Trump will give Detroit a pass and allow cars and trucks made in North America to be “good enough” to keep America moving.
In that scenario, there’s nothing keeping Ford back from at least another test of $10.40 – or even up within sight of $11. And that would be good for our calls.
But the real sweet spot in this trade is that with the underlying around $9.70, our calls become obviously attractive if Ford can edge up another $0.30 or so before expiration in a month. That’s three percentage points up. A tenth of a point every day.
Not every day will be up. The market is too volatile for that. However, volatility goes both ways...and it only takes one more leap to the upside like what we saw recently to take Ford over the top in a single bound.
Either way, those pennies add up nicely for us. Every cent we can get another trader to bid up our calls gives us a percentage point of win, more or less.
