The stock has toppled resistance on the 80-month moving average
American car staple Ford Motor Company (NYSE: F) has been making moves lately. Equity closed just above the market cap level of around $ 50 billion last Thursday, which coincides with the $ 12.79 area. The stock has broken a few key levels that could signal even more upside potential, including a trendline connecting lower 2010-2014 highs that it broke north in January, as well as the 80-month moving average of the long-term resistance it has fell in February. That long-term trendline served as support in 2011 and 2012, and last month’s pop could mean a bullish crossover, much like a Ford stock did in 2010.
Not only does Ford’s tech setup look promising, news has spread that the automaker is considering converting its plants to electric cars. It appears the company is able to sell to both early electric vehicle adopters and traditionalists as two of its new SUVs – the Mustang Mach-E and the Bronco – have a waiting list.
The expiration of around 28,000 13-strike calls last Friday eliminates potential resistance. While the March monthly contract is quite call intensive, the big 15 strike calls could act as a magnet for continued strength. The April monthly contract looks more balanced in terms of put and call open interest. With the put contracts out of the money (OOTM) a possible settlement of these OOTM puts after the end of the monthly magazines in the next week could contribute to F rising even higher.
Ford stock is also overdue for a round of analyst upgrades. Of the 12 covered brokers, only five call it a “strong buy”.
With that in mind, now seems like an ideal time to take Ford calls. The Schaeffer’s Volatility Index (SVI) of 48% is over 9% of the values of the last 12 months. Additionally, our recommended call option has a leverage ratio of 4.4 and will double as underlying equity increases by 22.2%.
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