Automotive giant Ford (NYSE: F) is one of the world’s best known, recognized, and appreciated brands. It should come as no surprise that in the last five years its share price shows a range: This shows stability in a volatile world like the one we live in today.
Ford’s operations are profitable in all regions, with the exception of South America and Europe. Things are however looking to improve in these areas and Ford is putting steps forward in making those regions profitable as well. They are starting with the “One Ford” program that is designed to adapt designs and needs to local markets.
Despite Asia being a strong and profitable region for Ford, the recent Yuan devaluation will make it more difficult to have the same results in the near/medium-term future. This is because 24% of Ford’s sales are from China, and customers will find it increasingly difficult to buy a car for personal or business use as the local currency is worthless.
There are however some advantages in the current marketplace. Oil is well below the $50 level, and this should increase the appetite for big trucks in the United States as driving a car is getting cheaper by the day. Judging by supplies that are delivered to the market, I would say low oil prices are here to stay as the oil shale boom as well as improvements in fracking technology has only started and further developments in those industries are expected.
If you put the Iranian deal in here as well, and the fact that Iran is already pumping at record levels, then you have one more argument that supports the above argument.
Moreover, the recent announcement for building a new plant in Nigeria, Africa’s biggest economy, puts Ford in the center of one of the most promising markets in the world: Africa.
The current $14.60/share area offers a nice opportunity for a call option from a technical point of view. At least in the sense that the last couple of years have seen the market form a bullish contracting triangle. Once this breaks the b-d trend line, the measured move or the thrust points may go all the way towards values between the 21$/share and 24$/share.
The b-d trend line should be considered broken when the market reaches $15.60/share, and that is the striking price recommended for Binary Options traders. As for the expiration date; it depends on the moment of time the striking price is reached: if it is reached in the first half of a month, go with an end of the month expiration date, and if it is reached in the second half of a month, then wait for the end of that month before engaging into a call option with an end of month expiration.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
