We dropped our fair value estimate range for Ford in an earlier report but still hold a small position in the shares. In a case like this, when an investor realizes that an investment is no longer desirable, what is the best way of “unwinding” that investment?

This report reviews our results from this investment and discusses our reasons for believing that we may yet be able to snatch victory from the jaws of defeat in this case. In short, we believe that the present environment of fear is overblown and are hesitant to sell when everyone else is selling and we also see enough to like in Ford’s results to think that the firm’s value will end up at the high end of our estimated range.

We look at an option strategy to further lower our Effective Buy Price and discuss an important rule for implementing this strategy to “repair” a stock investment. We also discuss how behavioral factors may be influencing our decision to extend the life of what we now consider to be a “busted” investment.

We believe that this presents a terrific case study for people who have participated in IOI training sessions as it incorporates lessons into the three pillars of Intelligent Option Investing: behavioral and structural influences, valuation, and option strategies.