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Ford as an option play . . .

corneliussmurphy 0

Ford Motor Company was literally just struck by lightning (excuse the pun) and there is so much positive news to discuss as I’ll try below . . . FYI, I’m updating this post on 12-9-2021 as there is now even more to report than last month so here’s what’s fueling the fire.

  • Ford’s new Mustang Mach-E is selling like hotcakes and customers love it
  • Ford’s new F-150 Lightning has over 200,000 reservation orders, so many that it just stopped taking orders
  • Ford’s new electric crate engine (this one is a sleeper) is brilliant
  • VIIZR, a SaaS technology built on Salesforce Field Service for small businesses is a game changer
  • Approximately $5 billion in relatively expensive debt being reduced
  • Investment in Argo AI is paying-off
  • Investment in Rivian now worth over $10 Billion
  • CEO Jim Farley is just what Ford needs and he’s betting his career on Ford
  • Chairman Bill Ford acquired nearly 2 Million shares by exercising stock options
  • Stock dividend added back for investors
  • A strong financial quarter

Ford is more than deserving of the recent attention it is getting along with a pop in the stock price. Market experts are slowly beginning to offer new target prices over  $30. Options players are just now beginning to take notice, so now is the time to play near-term calls or LEAPs as the premiums are relatively low compared to others in the electric car business. 

Note: When Ford sells its’ stake in Rivian, the stock price should immediately increase per share as its’ cash position will increase over 10%.

Take a look at the January 2023 CALLS, strike price anywhere from $25, $30 & $35 as these offer an excellent value. Don’t shy away from this one! Ford with its’ factory footprint has the capacity to build millions not thousands of electric vehicles, so they are absolutely a contender in this space.

A more strategic trade one might consider is a 3-tier option play where options are acquired at three different strike prices. An example is using the January 2023 CALLs strike price $25, $30 and $35. Once the $25 option CALL doubles in value, sell that option and the profit pays for the other two trades. Now, you are literally playing with the houses money and the trade is fully funded so ride it until 2023 and hopefully Ford will be selling at $35 to $50 per share and you’ll have a 10-fold win to brag about!

Updating this post again for Q2-2022 to reflect recent market adjustments from the war in Ukraine and inflation. With this in mind, I’m focusing carefully on September 2022 option CALLs strike price $25 as a trade to watch. When I priced this earlier this week, these were selling around $.13 x 100 or $13 per contract.

RISK – Trading options may result in potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options markets. Do NOT trade with money you can’t afford to lose.