Following Ford Warrants into Expiration

Ford stock is acting according to pattern at this point in the warrant expiration cycle. The stock came under slight pressure last week (both 12/13 and 12/14) with increased volume. If Ford follows a normal expiration pattern it should remain relatively flat to down as we head into the last day of trading for the warrants (FWS) next Monday (12/24).

The play, if F follows the classic pattern, would be to get long the stock beginning on the 20th or 21st and have a full position on by the close of trading on the 24th. Of course the “fiscal cliff” talk and a possible resolution of the issue may negate the pattern caused by the warrants. Trading a warrant pattern one always must take into account the overall general market condition, especially in a relatively high profile stock with a large number of shares outstanding.

Assuming the market is relatively benign and no major news breaks, such as a story that there will definitely NOT be a deal on the fiscal cliff, F should offer a high probability upside pop after the warrants cease trading on the December 24th.