$F Options Intelligence

🎯 SELL FORD DEC 19 11.67/13.00 BULL PUT SPREAD

I recommend this bull put spread because the term structure shows that the 10- to 15-day options (Dec 19 and Dec 26) have Clean IV around 25-26%, which is significantly below the 90-day baseline volatility of 36.5%, indicating options are underpriced and favor buying premium or selling credit spreads. Ford’s current stock price is $13.15, above its 50-day ($12.68) and 200-day ($11.69) moving averages, showing technical support. The institutional interest is strong with Marshall Wace LLP increasing its stake by 712.7%, and recent earnings beat and dividend support a moderately bullish outlook. The put-call volume ratio is 0.46, indicating bullish sentiment. This spread captures income with defined risk, benefiting from time decay and stable-to-rising price action ahead of earnings on 2026-02-04.

Trade Details
Sell 1 Dec 19 11.67 Put @ ~$0.55 (bid)
Buy 1 Dec 19 13.00 Put @ ~$1.35 (ask)
Net Credit: ~$0.80 (80 cents) per share or $80 per contract

Stock Price: $13.15

📊 Trade Metrics

• Max Profit: $80 (net credit received) if Ford stays above $13.00 at expiration
• Max Risk: $1.20 ($1.33 spread width - $0.80 credit) or $120 per contract
• Breakeven: $12.87 (strike sold minus net credit)
• Win Probability: ~70% (based on delta of short put ~0.30)
• Days to Expiration: 14 days (Dec 19)
• Theta: Positive for seller, benefiting from time decay

📈 Term Structure & Volatility Analysis

• Baseline 90-day Volatility: 36.5%
• 10-15 day Clean IV: ~25-26% (undervalued relative to baseline)
• Market IV Rank: 100% (overall high, but short-term options underpriced)
• Earnings Date: 2026-02-04 (trade expires well before earnings, avoiding earnings volatility)
• Put/Call Volume Ratio: 0.46 (bullish skew)
• Technicals: Price above 50-day and 200-day MAs, RSI neutral at 54.4

🎯 Why This Trade

The term structure shows short-term options are underpriced relative to historical volatility, making premium selling attractive. Ford’s stock price at $13.15 is supported by moving averages and recent positive institutional buying, including a 712.7% stake increase by Marshall Wace LLP. The recent dividend yield of 4.56% also attracts income-focused investors. The bull put spread benefits from time decay and low short-term IV, with limited risk if Ford remains above $11.67. The recent recall news (liftgate hinge cover) is not expected to materially impact near-term stock price. This trade aligns with a moderately bullish to neutral outlook and capitalizes on the current market conditions favoring premium sellers.

📊 Pro Analysis

• Current IV: 46.8% average, but Dec 19 Clean IV at 25.2% (undervalued)
• Expected Daily Move: ±$0.39 (2.95%) supports strike selection
• Max Pain: $11.67 (near short put strike) suggests potential pinning support
• Dividend: $0.15 quarterly recently paid, supporting price floor
• Sector peers mixed but Ford’s valuation (P/E 11.33) is reasonable and supported by earnings beat

🔍 Earnings Date Check

Earnings on 2026-02-04; Dec 19 expiration is well before earnings, avoiding earnings volatility risk.

💡 Trade Management

• Entry: Place limit order to sell Dec 19 11.67 Put and buy Dec 19 13.00 Put for net credit of $0.80
• Target: Keep full credit, consider closing if Ford falls below $12.87 (breakeven)
• Stop: Close if Ford drops below $11.67 to limit losses
• Time Stop: Close 1-2 days before expiration if still profitable

🔒 Pricing Validation

• 11.67 Put intrinsic value: $0 (OTM)
• 13.00 Put intrinsic value: $0.15 (slightly ITM)
• Spread width: $1.33
• Net credit $0.80 < spread width $1.33, valid credit spread
• Put-call parity and bid/ask prices respected

🔍 Market Overview

The market currently favors defined-risk premium selling due to very high IV rank (100%) but undervalued short-term IV in Ford options. The stock is technically supported above key moving averages with neutral RSI, indicating stability. Institutional buying and recent earnings beats support a neutral-to-bullish bias. The dividend yield of 4.56% adds to the income appeal. The upcoming Fed rate decision and CPI release in 5 days may influence broader market volatility, but Ford’s specific fundamentals and sector positioning remain steady. The recall news is unlikely to cause significant near-term disruption.

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Confidence Level: Moderate-High — The trade benefits from favorable term structure, technical support, and bullish institutional signals while limiting downside risk with a defined spread.

Risk Assessment: Defined risk of $120 per contract if Ford drops below $11.67 by Dec 19. Breakeven at $12.87 provides a cushion against minor pullbacks. Time decay and low short-term IV support premium collection.

This trade suits a moderately bullish investor seeking income with limited downside exposure ahead of earnings.