Mike Khouw's Ford Trade
Speaking on Options Action, Mike Khouw suggested that traders should consider taking a long position in Ford Motor (NYSE: F), using options. He thinks that lower gas prices should help the sales of F-150, but even if the gasoline prices go up the company has other great cars.
Khouw wants to buy the January 17 call options for $1, which means that the breakeven for this trade is $18. He said that it is a good idea to buy longer dated options because the options are cheap right now due to lower volatility. Ford closed Friday at $17.41, and it has to move 3.4 percent higher for this trade to break even.
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