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General Motors Company option traders eye an extended relief rally
The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is automaker General Motors Company (NYSE:GM), as call players roll the dice on an extended relief rally.
Call players are active in General Motors Company's options pits today, with the contracts running at a 25% mark-up to the average intraday pace. In fact, eight of GM's 10 most active options fall on the call side of the fence.
Most active by a mile is the November 30.50 call, where 10,820 contracts have changed hands -- mostly at the ask price, hinting at buyer-driven activity. With implied volatility on the rise, and only 615 contracts currently in residence here, it seems safe to assume a fresh batch of bullish bets is being initiated, a theory echoed by Trade-Alert.
The goal for today's call buyers is for GM to extend its lead past the $30.50 mark through the close on Friday, Nov. 21, when front-month options expire. More specifically, at-expiration breakeven for these option bulls is $31.29, or the strike plus the volume-weighted average price of $0.79.
Widening the sentiment scope reveals call buying has been a popular strategy on GM, despite its dismal 24% year-to-date deficit. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 4.51 ranks in the 96th percentile of its annual range, meaning calls have been bought to open over puts with more rapidity just 4% of the time within the past year.
In the front-month series, specifically, a heavy accumulation of call open interest resides just overhead at the November 31 strike, and it appears this is translating into a layer of options-related resistance for GM in today's session. Although the equity is trading higher after announcing plans to produce the electric drive for its Chevy Volt in Michigan, this upside is being contained near the $31 mark. In fact, General Motors Company (NYSE:GM) topped out at an intraday high of $31.06 earlier, but was last seen lingering near $30.93.