Options Intelligence Report: Ford Motor Co. (F) & SLM Corp. (SLM)
Higher Production At Ford Keeps Call Options Active
F ñ Ford Motor Co.
Shares of the automaker jumped 5% during the session to a new 52-week high of $12.34 after increasing its production target in Europe for the first-quarter on higher-than-expected sales of its Fiesta and Ka models. Bullish options trading ensued during the session as some individuals ramped up optimistic positions on the stock.
One investor rolled a long call position to a higher strike price and augmented the size of the position to extend bullish sentiment to the April contract. The trader sold 5,000 now in-the-money calls at the March $12 strike for a premium of $0.40 apiece in order to buy 10,000 calls at the higher April $13 strike for an average premium of $0.25 each.
The net cost of the transaction amounts to $0.10 per contract on account of the ratio nature of the combination and positions the investor to amass profits above a breakeven price of $13.10 by expiration in April. Traders exchanged more than 144,000 option contracts on Ford Motor Company in the first half of the trading day.
SLM ñ SLM Corp.
Bearish investors bombarded the student loan facilitator, familiarly known as Sallie Mae, today as shares slipped 2% lower to stand at $10.95 each. April contract put options are in demand, with the current dayís volume at the April $9 and $10 strikes exceeding existing open interest levels at those strikes.
Investors purchased nearly 8,000 puts at the April $9 strike for an average premium of $0.19 apiece. Put-buyers are perhaps anticipating continued bearish movement in the price of the underlying stock through expiration next month. The puts yield profits to the downside if SLM shares plummet at least 19.5% to breach the breakeven price of $8.81 by expiration.
Options traders also picked up about 3,500 puts at the April $10 strike for a premium of $0.33 each. These contracts yield profits beneath a breakeven share price of $8.67 through expiration in April.
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