Ford is pumping the brake on making electric cars and focusing on hybrid cars for North America.
They are delaying making their 3-row EV SUV and their new “T3” pickup truck. The delay is 2-3 years for each model.
Ford is the second-biggest electric car brand in the U.S., after Tesla. But people in North America aren’t buying electric cars as fast as expected. This could be because there aren’t many places to charge them and they’re also expensive.
Ford’s CEO, Jim Farley, says they want to make electric cars that make money and are good for the environment. They’re going to make a big electric SUV in Ontario, Canada, and spend about $1.3 billion turning the factory into one that makes electric cars.
Ford says they need more time to make sure people want big electric SUVs and to use better batteries. They lost $4.7 billion on electric cars last year, and they expect to lose between $5 billion and $5.5 billion this year. But they did sell 86% more electric and hybrid cars this year compared to last year.
Now, let’s move over to Tesla… They sold 386,810 electric cars worldwide in the first quarter of 2024, which was less than the 484,507 electric cars they sold in the fourth quarter of 2023.
This is the first time that’s happened since the COVID pandemic started. They expected to sell about 450,000 cars, but they didn’t even come close.
This was a big disappointment for Tesla. They had problems making enough cars because of things like a fire at their factory in Germany and focusing on a specific model at their factory in California.
This info-graphic shows the delivery decline:
Trading Double Diagonals
Not kidding around, this is one of my favorite trading strategies because it gives me so many avenues to make profit while maintaining my hedge every step of the way.
Let’s dig in.
Initially in this approach, you engage in both a diagonal call spread, and a diagonal put spread. Both strategies aim to benefit from the fact that the time value of options in the near term decreases faster than those further out.
At first glance, this might appear to be a complex option strategy. However, if you view it as profiting from slight stock movements across multiple option expiration cycles, it becomes easier to grasp.
Typically, when establishing the strategy, the stock will be positioned midway between your near dated short options. (See first illustration below. These near dated short options are the 100 and 125 for May 17.
The first profit objective is for the stock to stay between these near dated contracts. This allows for these options to expire worthless and keep the entire premium.
The back dated options help mitigate risk if the stock moves more than expected. In the illustration below these are the 90 and 135 options for June 21.
Ideally, you’d want to set up this strategy for a net credit. However, due to the front-month options having less time value than the back-month options, it might result in a small net debit initially. This cost can potentially be recovered when selling the second set of options after the front-month expiration.
As the front-month options approach expiration, the aim is for the stock to be between these two near dated strikes. You can often close the position for some profit, but if you want to double down and extract maximum profit, you will close the front-month options and sell another put and another call with the same expiration date as the initial ones. This will build an Iron Condor taking advantage of those back dated contracts we bought initially.
In a real sense, we have sold contracts against our long hedge TWICE, and this allows for significant profit.
Double Diagonal Illustration
1: ENPH priced at 112.28 so we will use this as our midpoint
2: These are the options we are going to use, and the order we would submit to the broker:
STO ENPH 05/17 100P
STO ENPH 05/17 125C
BTO ENPH 6/21 90P
BTO ENPH 6/21 135C
Limit 1.70 Credit or more.
3: June 21 is the back dated long options that we are buying
4: May 17 is the front dated short options that we are selling
5: Profit profile for the trade. Bit of a mind bend when you start trading these but behind that complexity lies 3 avenues for profit.
6: IV is at 73%
Profit from a Spike in Implied Volatility
Another avenue for profit is that this trade takes advantage of IV. Should it spike during the trade, we can extract our target profit earlier.
In the example below we haven’t changed the strikes, but only increased IV up to 100%
Remember above I mentioned we have 3 avenues for profit? Well here they are:
1) Time decay of the front contracts and simply exit the trade after they expire worthless.
2) IV Spike which allows the entire position to be closed early.
3) Roll the front contracts backwards and build and Iron Condor.
Our top traders at CFU trade these each week because they are a consistent method to generate income once you have a sizeable account and can handle the margin requirements.
CFU traders play all sides of the market: bullish, bearish, neutral, and even IV spikes. We can make money in all situations and our trading system assists us in knowing which direction holds the most likely outcome for profit and then we trade it using the most efficient strategy.
But what kind of results can you expect trading with us CFU? Remember we trade and use any and all Option Trading techniques such as Covered Calls, Put Credit Spreads, Call Debit Spreads, and so on. Here are our results from last week.
CFU Trading Results For Our Full Membership Service
These are the results our members got for the week ending April 5 trading with our Full Membership Service:
Where can you get started?
Why not try out our Free Trader level of service to get your feet wet and 1-2 trades for Free? When you’re ready to increase your trading game, upgrade later to our Full Member level of service.
Nothing to lose, and lots to gain and learn.
Look forward to seeing you inside,
Stephen
President, CFU
