By David Russell of OptionMonster
NEW YORK -- Ford (F) has pulled back, and the bulls want to drive the stock higher into the new year.
OptionMonster's tracking systems detected heavy activity in the short-term calls expiring Friday, Jan. 3. More than 55,000 contracts were purchased at the 17 strike, most of which priced for 17 cents and 19 cents. Volume was more than 28 times previous open interest, demonstrating that new money was put to work.
These calls lock in the price where shares can be purchased in the automaker, letting investors cheaply position for a move higher. The options also have the ability to generate significant leverage if a rally unfolds.
Ford shares declined 0.73% to $16.41 on Wednesday but continue to hold support around the same level where they bounced in October. It has been lagging rival General Motors (GM) despite strong results as investors worry that CEO Alan Mulally might jump ship in coming months.
Total option volume in Ford was triple its daily average on Wednesday, with overall calls outnumbering puts by more than 4 to 1.
Russell is long F.