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Ford Motor Company (NYSE: F) Shares climbed 6.6% on Thursday and are now up 18.6% last week after news that the startup had raised more than $ 2.7 billion from Ford electric trucks, Rivian, at $ 28 billion.
Ford news also triggers a wave of unusually large bull option trades on Thursday as investors continue to try to position themselves for the next generation of the auto industry.
Ford jobs: On Thursday, Benzinga Pro subscribers received dozens of option alerts related to unusually large Ford deals. These four stood out as being among the most important:
- At 9:42 a.m., a trader bought 1,000 Ford call options with a strike price of $ 5.50 expiring in January 2022, close to the ask price of $ 6.05. The trade represented a bullish bet of $ 605,000.
- At 10:28 a.m., a trader bought 5,192 Ford call options with a strike price of $ 11 expiring on February 19 near the ask price of $ 1.12. The trade represented a bullish bet of $ 581,504.
- At 10:29 a.m., a trader bought 5,038 Ford call options with a strike price of $ 11 expiring on February 19 near the ask price of $ 1,136. The trade represented a bullish bet of $ 572,316.
- At 10:32 p.m., a trader bought 5,712 Ford call options with an exercise price of $ 11 expiring on February 19 above the ask price of $ 1.182. The trade represented a bullish bet of $ 675,158.
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Why this is important to Ford investors: Even traders who stick exclusively to stocks often closely monitor options market activity for unusually large trades. Given the relative complexity of the options market, large options traders are generally considered to be more sophisticated than the average stock trader.
Many of these great options traders are wealthy people or institutions who may have unique information or theses related to the underlying stock.
Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there is no foolproof way to determine whether an options trade is a standalone position or a hedge.
In that case, given the relatively large size of the biggest trade on Thursday, they could certainly be institutional hedges.
Ford An EV game? EV stocks have been some of the hottest investments in the market for the past two years, with names like Tesla Inc (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) up over 1000% in the past 18 months. Ford has largely been left out of this rally, but investor sentiment may start to shift now that it is becoming clear that Rivian is positioned to be a very valuable investment for Ford.
Ford has an undisclosed stake in Rivian after investing $ 500 million in the company at a much lower valuation in April 2019.
Taking Benzinga: Ford has said it will spend more than $ 11.5 billion on electric vehicles through 2022, but the stock has overall fallen 2.9% in the past three years, while the stock price of tiny electric vehicle companies have skyrocketed. Buyers on Thursday’s call may have sensed that investor sentiment for Ford was finally starting to turn, and Ford has a long way to go to close the valuation gap with other EV stocks.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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