Options Trading News

May 29, 2013  Wed 5:16 AM CT

Buyers jumped into Ford early yesterday, betting that it still has fuel in the tank.

Option activity has been red hot in the auto maker, with more than 140,000 calls trading yesterday against fewer than 35,000 puts. The 15.50 Weekly calls expiring this Friday led out of the gate and remained active all session, with contracts going for $0.08, $0.09, and $0.11. More than 18,000 of those traded in volume far above the previous open interest of 1,751 contracts, indicating new positions, according to optionMONSTER's Heat Seeker tracking system.

These long calls lock in the purchase price for the stock, which is already up 12 percent in the last month, and they can generate some nice leverage if it keeps running. Because the options expire at the end of this week, the traders are clearly banking on a quick move. (See our Education section)

F rose 3.31 percent to $15.28 yesterday. It's been on our screening systems a lot recently, with some fast and furious buying. Total option volume was almost triple its daily average yesterday.

Disclosure: I own F calls.

(A version of this post appeared on InsideOptions Pro yesterday.)
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The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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