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Most Active Options Update: General Motors Company (GM)

General Motors Company pullback has option traders on edge

by 12/27/2013 1:44 PM
Stocks quoted in this article:

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 this afternoon is General Motors Company (NYSE:GM).


A fundamental folly has General Motors Company seeing red today, and the move lower has prompted an uptick in put volume in the stock's options pits. Roughly 25,000 puts have changed hands today -- a 10% mark-up to the expected intraday pace, as well as more than two times the number of calls exchanged. The most sought-after position is GM's January 2014 37-strike put, where 78% of the 5,902 contracts traded have done so on the ask side. Implied volatility has risen 1.9 percentage points, pointing to the initiation of a fresh batch of bearish bets.

Considering GM hasn't traded south of $37 on an intraday basis since Nov. 13, delta for the put is docked at negative 0.12, suggesting a slim 12% chance of an in-the-money finish. Should the stock fail to tumble the 9.9% necessary to breach the strike price, the most today's put buyers stand to lose is the initial premium paid. According to Trade-Alert, the volume-weighted average price for the puts is $0.23 apiece.

Today's dip notwithstanding, General Motors Company (NYSE:GM) has put in a strong performance on the charts in 2013, with the shares up more than 42%. Additionally, the equity hit a record post-bankruptcy peak of $41.85 just last week, and matched it again yesterday. As such, a portion of today's put buying at the out-of-the-money strike could be indicative of shareholders hedging against an extended pullback. In today's session, the equity was last seen 1.1% lower at $41.06, after announcing a roughly 1.5 million vehicle recall in China.


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