Buzz Stocks: General Motors, Alcoa Inc., and Tesla

Today's stocks to watch in the news include General Motors Company (GM), Alcoa Inc (AA), and Tesla Motors Inc (TSLA)

Mar 9, 2015 at 9:17 AM
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Futures are signaling a cautious start, as traders continue to fret over the Federal Reserve's timeline for raising interest rates. Meanwhile, among specific equities in focus are automaker General Motors Company (NYSE:GM), aluminum issue Alcoa Inc (NYSE:AA), and electric car concern Tesla Motors Inc (NASDAQ:TSLA).

  • GM is up nearly 3% in electronic trading, after the company announced a $5 billion share buyback program and new capital allocation proposal as part of an agreement reached with activist investor Harry J. Wilson. In return, Wilson will no longer seek a seat on GM's board. Since taking a sharp bounce off their 80-day moving average in early February, shares of General Motors Company have performed well, tacking on 12.6% to trade at $36.54. Against this backdrop, options traders -- and analysts -- have been growing increasingly optimistic. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GM's 10-day call/put volume ratio of 3.79 ranks in the 90th annual percentile.

  • AA said it will purchase Pennsylvania-based titanium producer RTI International Metals, Inc. (NYSE:RTI) in an all-stock transaction valued at roughly $1.5 billion. "This builds out our value-added business in a very attractive market -- aerospace," commented Alcoa Inc CEO Klaus Kleinfeld. It's been a slow start to the year for AA, which is down 8.3%. What's more, after closing at $14.48 on Friday, the stock is down 3.8% ahead of the bell, and on pace to test support at its 320-day moving average -- a trendline that served as a foothold for AA during last week's technical troubles. Meanwhile, in the options pits, speculators have taken a shine to calls over puts among contracts set to expire in three months or less. Specifically, AA's Schaeffer's put/call open interest ratio (SOIR) of 0.55 rests lower than 74% of similar readings taken in the past year. Simply stated, speculative traders are more call-heavy than usual toward the security.

  • Underperforming sales have prompted TSLA to slash its headcount in China, although the company has yet to comment on how many pink slips will be passed out. Technically speaking, the stock has been charting a path steadily lower since topping out at a record peak of $291.42 last September -- shedding roughly one-third of its value to trade at $193.88. Although some big-time options bulls have kept TSLA on their radar, the withstanding trend has been toward long puts. At the ISE, CBOE, and PHLX, for example, Tesla Motors Inc's 50-day put/call volume ratio of 1.01 ranks higher than 79% of similar readings taken in the past year. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent months.
 

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