Ford Motor Company (NYSE: F) shares soared 6.6% on Thursday and are now 18.6% last week after news that Ford’s electric truck startup Rivian raised more than $ 2.7 billion in a valuation of $ 28 billion.
The Ford news also unleashes a flood of exceptionally large trades with bullish options on Thursday as investors continue to try to position themselves for the next generation in the auto industry.
Ford’s business: On Thursday, Benzinga Pro subscribers received dozens of option alerts related to Ford’s unusually large deals. These four stood out as some of the biggest:
- At 9:42 am, a trader bought 1,000 Ford call options with a strike price of $ 5.50 due in January 2022 near the sale price of $ 6.05. The deal represented a bullish bet of $ 605,000.
- At 10:28, a trader bought 5,192 Ford call options with an exercise price of $ 11 expiring on February 19, close to the sale price of $ 1.12. The deal represented a bullish bet of $ 581,504.
- At 10:29, a trader bought 5,038 call options from Ford with an exercise price of $ 11 expiring on February 19 near the sale price of $ 1,136. The deal represented a high bet of $ 572,316.
- At 10:32 pm, a trader bought 5,712 call options from Ford with an exercise price of $ 11 expiring on February 19 above the sale price of $ 1,182. The deal represented a bullish bet of $ 675,158.
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Why it matters to Ford investors: Even traders who limit themselves exclusively to stocks often monitor the activity of the options market closely for exceptionally large trades. Given the relative complexity of the options market, large options traders are usually considered to be more sophisticated than the average stock trader.
Many of these big options traders are wealthy individuals or institutions that may have unique information or theses related to the underlying stocks.
Unfortunately, stock brokers often use the options market to hedge against their larger stock positions, and there is no foolproof way to determine whether an options trade is an autonomous position or a hedge.
In that case, given the relatively large size of the biggest trade on Thursday, they could certainly be an institutional hedge.
Ford an EV game? EV shares have been some of the most important investments in the market for the past two years, with names like Tesla Inc (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) has increased by more than 1,000% in the past 18 months. Ford was left out of that rally, but investor sentiment may be starting to change now that it is becoming clear that Rivian is positioned to be a very valuable investment for Ford.
Ford has an undisclosed stake in Rivian after investing $ 500 million in the company at a much lower valuation in April 2019.
Benzinga’s opinion: Ford said it is spending more than $ 11.5 billion on EVs by 2022, but shares have fallen 2.9% overall over the past three years, while the stock price of tiny EV companies has skyrocketed. Buyers of Thursday’s call may have felt that Ford investor sentiment is finally starting to change, and Ford has a long way to go to close the valuation gap with other EV stocks.
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