Unlocking the Potential of Ford Motor Co. Options on December 6th
Traders in Ford Motor Co. (Symbol: F) got a peek at new options coming into play today, set to mature on December 6th. The dawn at Stock Options Channel ushered in a tinge of excitement as our YieldBoost algorithm sifted through the F options spectrum for these fresh December 6th contracts, singling out a put and call contract that piqued our interest.
Exploring the Put Option
Venturing into the realm of put options, the $11.00 strike price took center stage with a modest bid of 57 cents. By opting to sell-to-open this put contract, an investor commits to securing the stock at $11.00 while reaping the premium, thereby pegging the cost basis of the shares at $10.43 (pre-broker fees). For those eyeing F shares, this presents an appealing avenue compared to the current $11.13/share rate.
At approximately a 1% markdown from the prevailing trading price of the stock, the $11.00 strike can be deemed out-of-the-money by that margin. Consequently, there looms a scenario where the put contract may lapse aimlessly. Statistics reflect a 55% probability of this outcome materializing, an area Stock Options Channel shall closely monitor, encapsulating the dynamics in an illustrative chart on our platform. Should this contract fizzle out, the premium would charm with a 5.18% cash commitment return or a 43.94% annualized yield — christened as the YieldBoost hallmark by Stock Options Channel.
A visual retrospective of Ford Motor Co.’s twelve-month trading trajectory, spotlighting the location of the $11.00 strike, is depicted below:
Probe into the Call Option
Shifting focus to the calls domain, the $11.50 strike call contract surfaced with a bid of 39 cents. Delving deeper, should an investor procure F shares at the current $11.13/share juncture and proceed to sell-to-open the call contract as a “covered call,” they commit to vending the stock at $11.50. The call seller, in this dance, garners the premium, orchestrating a total return (sans dividends) of 6.83% if the stock triggers the call by the December 6th deadline (post adjustments for broker fees). However, the catch lies in leaving potential stock gains unreaped if F shares embark on a meteoric ascent, underlining the import of scrutinizing the company’s preceding twelve-month trading narrative. The chart unveiled below sketches F’s recent trading history, with the $11.50 strike painted in bold red hues.
As the $11.50 strike mirrors a mellow 3% premium atop the extant stock price, there exists a scenario where the covered call contract may meet a fruitless end, leaving the investor with both stock holdings and the pocketed premium. Current statistics hint at a 57% likelihood of this outcome. Stock Options Channel stands vigilant, charting the evolving probabilities on our platform and encapsulating them in numerical form, supplementing the narrative with the option contract’s trading history. A dormant expiry would gift the investor a 3.50% bonus return or a 29.71% annualized boon, christened affectionately as the YieldBoost moniker.
The implied volatility levels clock in at 43% for put contracts and 40% for call contracts, lending further intricacy to the options landscape. Delving deeper, the real trailing twelve-month volatility, computed at 39% and considering the last 251 closing values and today’s F price of $11.13, offers a poignant backdrop to mull over. For a deeper dive into thought-provoking put and call option strategies, consider perusing StockOptionsChannel.com.
