On the floor of the trading world, investors in Ford Motor Co. had their eyes peeled today as new options emerged, set to expire on April 26th. A moment of potential, a ripple of intrigue reverberated across the market.
As the clock ticked, the YieldBoost formula at Stock Options Channel thoroughly sifted through the F options chain. In the vast sea of contracts, one put and one call contract stood out, capturing the attention of those seeking opportunities in the tumultuous waters of the stock market.
Cast Your Gaze on the Put Option
Behold the put contract at the $11.50 strike, beckoning with a current bid of merely 20 cents. Picture this: an investor, daring and resolute, opting to sell-to-open that put contract. Should they venture down this path, they commit to acquiring the stock at $11.50. Yet, they shall not go unrewarded; for in this dance of risk and reward, they shall pocket the premium, thus setting their cost basis at a modest $11.30 before broker commissions.
Consider this – the $11.50 strike hanging tantalizingly 7% below the current trading price of the stock. Dangling just out of reach, whispering possibilities of worthlessness. The analytical winds whisper of a 75% chance of expiration sans value. An enticing risk, a gambit in the grand play of market forces.
A visual aid, a chart depicting the ebbs and flows of Ford Motor Co., shows where the $11.50 strike languishes in the historical wake of the stock’s fluctuating journey. Green highlights, marking the battlefield of opportunity.
Embark on the Call Option Journey
Turn now to the call contract at the $13.00 strike, beckoning with a 33-cent bid. Imagine an investor seizing the reins, purchasing shares of F stock at $12.41/share. With a resolute spirit, they opt to sell-to-open that call contract as a “covered call,” pledging to unload the stock at $13.00 should the fateful day of April 26th arrive.
A leap of faith into the unknown, a promise of a 7.41% return if the stock is summoned forth at expiration, excluding the whispers of dividends. But beware, for the heavens may open, showers of profit drenching those who dare. Yet, the call of risk lingers in the air, with the $13.00 strike teasingly perched 5% above the current trading price, a dance of possibilities and pitfalls.
Chart in hand, the historical voyage of Ford Motor Co. unfolds before us. The $13.00 strike marked in dangerous hues of red, a signpost in the volatile terrain of the stock market.
The Dance of Implied Volatility
As the stage is set, the implied volatility of the put contract stands proud at 35%, while its call counterpart shadows closely at 34%. Yet, amidst the chaos, the true volatility of the past twelve months, standing at a resolute 34%, paints a different picture.
In the ever-shifting landscape, where fortunes rise and fall like the tide, the options market beckons, a theater of calculated risks and strategic maneuvers. A realm where courage and caution intertwine, offering a glimpse into the intricate tapestry of financial possibility.
