Ford Motor Company (NYSE: F)’s shares rose 6.6% on Thursday and have now risen 18.6% in the past week following the news that Rivian, the start-up Ford electric truck, is up more than $ 2.7 billion at a collected valuation of $ 28 billion.
The Ford news also sparked a wave of extraordinarily large bullish options on Thursday as investors continue to position for the next generation of the automotive industry.
The Ford Trades: Benzinga Pro subscribers received dozens of cautionary warnings on Thursday related to extraordinarily large Ford deals. These four were the largest:
- At 9:42 a.m., a dealer buys 1000 Ford call options with a strike price of $ 5.50 that expired in January 2022, close to the price of $ 6.05. The trade represents a bullish bet of $ 605 000.
- At 10:28 a.m., a dealer buys 5,192 Ford call options with a strike price of $ 11 that expired on February 19, close to the asking price of $ 1.12. The trade represented a bullish bet of $ 581 504.
- At 10:29 a.m., a dealer buys 5,038 Ford call options with a $ 11 strike price that expires on February 19, close to the asking price of $ 1,136. The trade represented a bullish bet of $ 572 316.
- At 10:32 p.m., a dealer buys 5,712 Ford call options with a strike price of $ 11 that expires on February 19 above the asking price of $ 1,182. The trade represented a bullish bet of $ 675 158.
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Why this is important for Ford Investors: Even stock-only traders regularly monitor the activities of the options market for unusually large trades. Given the relative complexity of the options market, large options traders are generally considered more sophisticated than the average stock trader.
Many of these large options traders are wealthy individuals or institutions that have unique information or theses related to the underlying stock.
Unfortunately, stock traders often use the options market to hedge against their larger stock positions, and there is no sure way to determine if an options trade is a stand-alone position or a hedge.
In this case, given the relatively large volume of the biggest trade on Thursday, it could certainly be an institutional hedge.
Ford an EV Play? EV shares have been some of the hottest investments in the market in recent years, with names such as Tesla Ing (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) has risen more than 1,000% over the past 18 months. Ford has mostly been left out of the rally, but investor sentiment may start to change now that it’s becoming clear that Rivian’s is a very valuable investment for Ford.
Ford has an unknown stake in Rivian after investing $ 500 million in the company at a much lower valuation in April 2019.
Benzinga’s name: Ford said it will spend more than $ 11.5 billion on EVs by 2022, but its share has fallen by a combined 2.9% over the past three years, while the share price of small EV companies has risen. Thursday’s buyers may have felt that Ford’s investor sentiment was finally starting to turn, and Ford still has a long way to go to close the valuation gap with other EV stocks.
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