Shares of automaker Ford Motors (F) have been on the rise in the past year, as the company has been expanding its electric vehicle fleet. One trader sees that trend continuing.
That’s based on the June $24 calls. With 192 days left until expiration, over 38,500 contracts traded against a prior open interest of 1,362 contracts, for a 28-fold rise in volume. The buyer of the calls paid $1.42 to make the trade.
With a recent price just under $20, shares would need to rally another 20 percent in the first six months of 2022 for the option trade to move in-the-money.
Even with shares up nearly 110 percent in the past year, the stock trades at under 10 times earnings.
Action to take: Further upside is likely, even after the stock’s big move in the past year as a cycle is underway with the company’s embrace of electric vehicles. Investors may like shares, as the company recently brought back its dividend, with a 2.1 percent dividend yield.
Traders may like the option, as it has plenty of time to play out. And with shares in a strong uptrend, the option could easily move in-the-money and possibly deliver triple-digit returns depending on how quickly shares continue their move higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.