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The wheel on Ford: why cheap stocks attract wheelers, and what can go wrong

Ford is a common first wheel stock because 100 shares cost far less than most big names. That makes the math fit small accounts. But a cheap share price isn't a cheap risk, and a cyclical carmaker can keep falling. Here's a made-up cycle where it does, worked out to the dollar.

Options guide · 9-minute read · Updated 2026-10-27

What Ford is like for a wheel seller

Ford (F) is a large US carmaker. For the wheel strategy, here's what stands out.

• A low share price. Ford has traded in the teens or lower for much of recent years, so 100 shares have cost roughly one to two thousand dollars. Check today's price.
• A cyclical business. Car sales rise and fall with the economy, interest rates and fuel prices. Recalls, labour talks and trade rules can all move the stock.
• A dividend, with a history. Ford pays a quarterly dividend and has at times added one-off extra payments. It also suspended its dividend in 2020 and brought it back in 2021. Dividends can be cut.
• Quarterly earnings, with the usual gap risk around each report.
• Busy options with strikes close together near the price. Check the spread on the strike you want.

Nothing on this page is a recommendation. Ford is here because people search for it, and because it's the classic example of a cheap stock that wheelers reach for first.

Why cheap stocks attract wheelers

The appeal is simple: the obligation is small. A $11 put ties up $1,100. A $45 put ties up $4,500. On a small account, only the cheaper one fits your cap.

But a stock's price says nothing about its risk. A $12 stock can fall 30% as easily as a $120 one, and the percent is what hurts your account. Before cheapness, ask the quality question: is this a business you'd hold for a year if the price fell and stayed down? Quality checks before wheeling a stock gives a list.

Account note: in Canada, covered calls are widely allowed in a TFSA or RRSP, while cash-secured puts depend on the broker. Options permissions differ by broker, so check yours.

A cycle that goes wrong (an illustration, not a trade idea)

These numbers belong to a made-up cheap carmaker, XYZ. They are not Ford's prices or premiums. XYZ trades at $12.

Step 1: the put. You sell a 30-day $11 put for $0.30 and collect $30. Your broker sets aside $1,100.

Step 2: assignment. XYZ reports weak sales and closes expiry day at $10. You buy 100 shares at $11. Your running cost is $11 − $0.30 = $10.70. You're already $70 behind.

Step 3: the first call. You sell a 30-day $11 call for $0.15 ($15). XYZ drifts to $9.50. The call expires. A quarterly dividend of a made-up $0.15 ($15) arrives. Running cost: $10.40.

Step 4: the second call. Calls at $11 now pay almost nothing. You sell a $10 call for $0.20 ($20). That's below your $11 purchase price. XYZ slides to $8.50. The call expires. Running cost: $10.20.

Step 5: where you stand. XYZ is at $8.50. Your 100 shares are worth $850.

And step 4 set a trap. If XYZ had bounced to $10.50 that month, your shares would have been called away at $10, a dollar below what you paid. You'd have locked in a loss right as the stock recovered. The strike-below-cost trap explains that choice.

The cheap-stock trap: selling more because it's cheap

The bigger danger with a low share price is selling several contracts "because it's only a thousand dollars each." Here's the same cycle at different sizes, at the step-5 price of $8.50.

Five contracts of a cheap stock is the same money at risk as one contract of a $55 stock. The low price just hides it. Size by the cash promised, as in sizing math, the full obligation rule.

The rule for next time

1. Start with the business, not the price. Would you hold it through a 30% drop for a year? If not, skip it.
2. Size by cash promised. Count every contract's strike × 100 against your cap.
3. Check the earnings date before every put. A cyclical company can gap on one report.
4. Don't count on the dividend. It can be cut, and Ford's was in 2020.
5. Decide your call rule in advance. Will you sell calls below your cost or not? Write it down before you're assigned, not after.

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