Profit Upfront from Buying Ford (NYSE:F)

Ford

As Ford has been tearing up the start of the year with great sales, let’s talk about a strategy to buy some shares of Ford but lock in some profit right up front.   

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We all know that Ford had some bang up sales in January (detailed below) and this has translated to some strong stock price increases.  If you decided to enter into a covered call position on Ford, you could earn about 3% right up front by selling the $13 March Calls.  Based on rates recently checked, buying 100 shares of Ford Motor Company (NYSE:F) for $12.79/share and then selling the $13 March 2012 Call contract for $0.38 could net you 4.75% profit if Ford share close above $13.00/share at the expiration date in 43 days.  That may not sound like much, but the compound annual growth rate (CAGR) on the assigned option position is 48.3%!  Additionally, you would have some downside protection to $12.41, or about a 3% drop in stock price as your breakeven point.

Ford’s sales highlights include the Escape, produced at Ford’s Kansas City Assembly Plant in Claycomo, Mo., showed particularly strong January sales of 17,259, up 23.5 percent from the same month a year ago. The Escape and the Focus combined to provide 49 percent of the overall 7 percent gain in sales that Ford (NYSE: F) realized in January. Total sales at Ford were 136,710.  The F-150, also produced at the plant, was part of a 7.5 percent increase in F-series sales of 38,493. The F-150 remains the top-selling vehicle in the United States, accounting for 42 percent of Ford’s overall sales last month. – Bizjournals

Over the past 12 months Ford Motor Co (F) shares have traded between a 52-week low of $9.05 and its 52-week high of $16.51.  Ford Motor Co shares are now trading with a P/E Ratio of 7.4 and EPS of 1.66.  F shares closed the day at $12.79, up 4.32% and $0.53. Volume finished the day at 78.81M shares traded.  Ford has a dividend yield of 1.63%.

F

Ford Motor Company primarily develops, manufactures, distributes, and services vehicles and parts worldwide. It operates in two sectors, Automotive and Financial Services. The Automotive sector offers vehicles primarily under the Ford and Lincoln brand names.

 

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