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Option Brief: General Motors Company (NYSE:GM) is down 2.9% this afternoon at $35.08, as traders express concern about the automaker's recently announced truck discounts. The stock has shed 16.2% since touching a record high of $41.85 in late December, yet some option players are hoping the equity rebounds in the short term.
GM's near-term options are in demand today, as evidenced by the stock's 30-day at-the-money implied volatility (IV) of 28%, an increase of 8.2% from Friday's close. Most popular is the February 35 call, where more than 6,600 contracts have changed hands, mostly at the ask price. Volume has exceeded open interest at the strike, IV is on the rise, and the International Securities Exchange (ISE) confirms that a healthy portion of the action is of the buy-to-open variety.
The goal of the call buyers is for General Motors Company (NYSE:GM) to rebound off the $35 level, which has emerged as support for the stock in February. The higher GM climbs atop the strike, the more the calls gain in intrinsic value. Should GM sink beneath $35 before the options expire at the close on Friday, Feb. 21, the most the buyers will lose is the initial premium paid for the calls.