Ford Motor Company (NYSE:F) has had plenty of fireworks lately after changing its CEO in 2017. And Ford stock investors should know that Wall Street is watching — particularly options traders.
Specifically, July 21 2017 $10.50 Calls for Ford stock options have some of the highest implied volatility of all equity options.
Implied volatility in Ford stock options shows how much movement that Wall Street thinks is possible from this company in the coming weeks. History shows that stock options like those of Ford Motor Company that have high levels of implied volatility could make a big move in one direction or the other.
It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Ford Stock Analysts Think?
Clearly, options traders are pricing in a big move for Ford shares, but what is the fundamental picture for the company? Currently, Ford is a Zacks Rank #5 (Strong Sell) in the Automotive – Domestic industry that ranks in the Bottom 17% of our Zacks Industry Rank. Over the last 30 days, the Zacks Consensus Estimate for the current quarter has increased from 44 cents per share to 45 cents.
Given the way analysts feel about Ford right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
Looking to Trade Options?
Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the TSLA earnings report completely free. See it here: Tesla Earnings Preview with Options Trade Ideas.
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