Ford Motor (F) 3/12/10 PriceWatch Alert Targets 15.26% Downside Protection

Posted: Friday, March 12, 2010 8:08 AM EDT
By: Market Intelligence Center Staff

Ford Motor (NYSE: F) closed yesterday at $12.91. So far the stock has hit a 52-week low of $1.98 and 52-week high of $13.04. Ford Motor stock has been showing support around 12.66 and resistance in the 13.10 range. Technical indicators for the stock are Bullish and S&P gives F a neutral 3 STAR (out of 5) hold rating. F appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Sep '10 12 covered call for a net debit in the $10.94 area. That is also the break even stock price for this trade. This covered call has a 190 day duration, provides 15.26% downside protection and a 9.69% assigned return rate for an 18.61% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the F Jan '11 7.50 Call and selling the Sep '10 12 call for a $3.83 debit. The trade has a 190 day life and would provide 12.24% downside protection and a 17.49% assigned return rate for a 34.00% annualized return rate (for comparison purposes only). Ford Motor does not pay dividends at this time. [FBB-Seven Summits Research]