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Most Active Options Update: General Motors Company (GM)

Technical and fundamental woes fail to dissuade General Motors Company call players

by 3/19/2014 2:24 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).

Most

Despite a recent string of technical and fundamental setbacks, General Motors Company option traders have shown a preference for calls over puts of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 210,400 calls over the last 20 sessions, compared to 99,445 puts, resulting in a call/put volume ratio of 2.12.

This call-skewed bias is evident in today's session, albeit at a much slimmer margin. At last check, roughly 40,000 calls have crossed the tape, versus 37,000 puts. The two most active contracts are the June 35 call and put, and the majority of the volume at each strike changed hands in symmetrical blocks of 9,500 at or below the bid price, suggesting they were sold. With GM lingering near $35, this could represent a trader opening a short straddle; however, there is not enough data at the moment to confirm whether this or another strategy entirely (such as selling to close a long straddle) is taking shape.

What does seem to be apparent is that short-term traders are eyeing a move higher over the next two-plus weeks. Specifically, GM's weekly 4/4 35.50-strike call has received notable attention, and 4,130 contracts have changed hands thus far. Nearly all of this volume traded in a multi-exchange sweep of 3,997 at the ask price of $0.65. Implied volatility rose 1.2 percentage points on the sweep, and volume outstrips open interest, pointing to buy-to-open activity. Delta for this call is docked at 0.45, suggesting a 45% chance of an in-the-money finish at the close on Friday, April 4.

On the charts, General Motors Company (NYSE:GM) has struggled since hitting a record peak of $41.85 in late December, with the shares off 16.4%. This downtrend was exacerbated earlier this month when the U.S. House Energy and Commerce Committee said it was launching an investigation into GM's global recall of around 1.6 million vehicles. More recently, new CEO Mary Barra revealed she was not made aware of the vehicles' defects until Jan. 31. Additionally, Barra said that considering "something went wrong with our process in this instance and terrible things happened," GM will begin revamping its recall protocol.


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