Ford Motor Co. (F) – The
better-than-expected jobs number out this morning revved up investor
appetite for automobile stocks, driving shares in Ford Motor Co. up 4.0%
to $12.75. Call options on the U.S. automaker are flying off the
shelves, with nearly 5 calls in play on the stock for each single put
option traded. The single-largest transaction in Ford options appears to
be a bull call spread that yields maximum possible profits if the price
of the underlying rallies nearly 20.0% during the next few months to
expiration. It looks like one trader purchased a 30,000-lot April
$14/$15 call spread for a net premium of $0.15 per contract. The
position may be profitable at expiration if shares in Ford Motor Co.
climb 11.0% to surpass the effective breakeven price of $14.15. Maximum
potential profits of $0.85 per contract are available on the spread
should shares in the auto manufacturer surge 17.6% to exceed $15.00 by
expiration. Overall options volume on Ford is up above 175,000 contracts
just before 1:00 p.m. ET.
General Motors Co. (GM) – GM's
shares are outperforming fellow U.S. automaker, Ford Motor Co., this
afternoon, with the stock trading 8.4% higher on the session at $26.35
as of 12:55 p.m. in New York. Optimism spurred by this morning's
stronger-than-expected jobs report was followed by greater-than-usual
options action in the name. A debit put spread in the March expiry,
which may be an outright bearish bet that the rally is running on empty,
or an attempt to hedge a long stock position, caught our eye this
morning. It looks like the trader responsible for the spread purchased a
4,000-lot Mar. $22/$25 put spread at a net premium of $0.67 per
contract. Profits, or downside protection, kick in if shares in General
Motors decline 7.7% to breach the effective breakeven price of $24.33 by
expiration next month. Maximum potential profits of $2.33 are available
on the position in the event that the price of the underlying drops
16.5% to settle below $22.00 at March expiration. GM is scheduled to
report fourth-quarter earnings ahead of the opening bell on February 16.
Masco Corp.