Ford January Expiration Trade Idea

I’ve recently had flashbacks of the popular press reassuring the popular investor that multinationals were less risky because large percentages of their profits come from overseas. I’m attributing these flashbacks not to an illegal substance but to the weakening Euro.

So I starting thinking again about Ford $F and those percentages.

Disclaimer: Ford is one of those stocks that I personally just like to own. For no other reason than supporting an un-bailed American company. Somehow, I see it as supporting American exports, workers and the general economy. For what that’s worth…

Here are the “operating highlights”  from Ford’s 2010 financial report:

Ford Worldwide Sales

Ford Europe represents 28% of Ford’s total sales (over 55% of Ford’s sales are outside North America).

Now the Operational Results:

Ford Operational ResultsThis 182 number strikes me as odd given that it should represent 28% of the sales volume. Are they suffering on european margins? Or I don’t understand, which is probable.

In any case, now for the revenue:

Ford Revenue 2010


24% of Ford’s automotive revenue comes from Europe. Lets just stick with the 24% number for fun and have a look at the Euro since January 2010. Ironically the Euro today is exactly where it was 1 year ago but  I’m sure my flashbacks date back to May.

Euro Dollar 1 Year Chart

Now for that $29.5 billion in revenue from Europe… What will happen to that revenue if the Euro continues it’s downward spiral and Europe’s demand falls of a cliff ?

I’d say 24% of Ford’s revenue is at significant risk.

I’m looking at January puts or January spreads for the possibility that $F retests it’s lows of 9.

Ford 6 Month Chart