Ford Motor Company (NYSE:F) had an eventful year so far with share prices going up by around 6.5% so far in 2015. Meanwhile, many option activities were happening in Ford Motor Company (NYSE:F) stock on Friday. Ford Motor Company (NYSE:F) stock traded three times average daily call volumes on Friday. Option Action Traders Michael Khouw and Brian Stutland talked on CNBC about why there was tremendous option activity on Ford Motor Company (NYSE:F) stock.
Khouw pointed out that there was more than three times average call volume on Friday for Ford Motor Company (NYSE:F). He said that it could be due to a single institutional trade in June.
“Somebody traded the June $17, $18, $19 call butterfly. Sounds like a mouthful. Almost 14000 times. What does that mean? They bought the June $17 call just under 14000 times, they sold the $18 almost 28000 times and then they bought the $19 strike calls also about 14000 times. The interesting thing about this trade is that you could put the whole package on for less than a dime,” Khouw said.
He pointed out that the entire option costs less than a dime for the trader. He said that traditionally butterfly trades are like threading the needles, more riskier, but he feels that this particular butterfly trade on Ford Motor Company (NYSE:F) is a lot less riskier.
Stutland said that this trade on Ford Motor Company (NYSE:F) makes a lot of sense. He mentioned that if the Ford Motor Company (NYSE:F) stock could break through $17 mark, it could easily get to the $18 mark, which is why the strike was set at $18. He also said that this trade depends a lot of the volatility of the Ford Motor Company (NYSE:F) stock. He feels that this is the only possible trade with lesser risk at the moment on Ford Motor Company (NYSE:F) stock.
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