Notice there are three fairly heavy positive divergences on the two stochastics and also on the MACD. The MACD divergence gets more weight than the stochastics.
On a closing basis the stock price is forming a diagonal triangle and trending down. Odds are for a quick sharp break to the upside with this pattern.
GM has some similar patterns, but Ford looks to be poised for a stronger rally on a percent return basis.
I will be purchasing the January 7.50 calls which are 20 cents ask, 15 cents bid.
Fair value is .1811, so we are not getting ripped off on the trade.
The reason I am going out of the money is that I am looking for a minimum rally to $8.20 which would bring the options value to .80/.85 or just over 400% on a R.O.I. basis.
I may put together a mix of the Jan $6 calls and the Jan 7.50 calls for a more conservative strategy, just in case my upward target is too optimistic.
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