Wednesday, December 30, 2015

Ford long term short 0 cost option play




1) A demographics expert, Harry S. Dent, declares auto sales have hit a generational peak this year.

2) The weekly chart shows a clear down trend.

3) I can short Jan 2017 F 13 Call for about 1.85, buy the 15 Call for about .85 for a $1 credit spread.

4) I can use the $1 credit to buy a Jan 2017 F 13 Put (maybe pay .05 - .10).

5) My cost of entry is near zero.

6) My risk is the $2 strike spread.

7) If I use the all time F low of 11/2008 of about $1 as a target, then the reward would be about $12 (13 strike minus 1). 

8) So, $0 to enter and 1:6 risk:reward. 

Looks too good to be true, if you want to short Ford.