Options Bulls Race Toward GM Before Earnings

GM hit a record high of $57 earlier today

Assistant Editor
Feb 8, 2021 at 2:47 PM
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Auto manufacturer General Motors Company (NYSE:GM) is in the spotlight for more than just its upcoming earnings, due out before the open on Wednesday, Feb. 10. The company released a commercial during the Super Bowl last night featuring popular comedian Will Ferrell and a focus on its electric vehicle goals for 2025. In response, the stock roared to a record high of $57 earlier today. At last check, GM is up 3.1% to trade at $56.10.

Looking at General Motors' earnings history, the stock was higher after five of its past eight post-earnings sessions, including a 5.4% pop back in November. In the last eight quarters, GM has averaged a swing of 2.6%, regardless of direction. This time around, the options market is pricing in a much larger move of 8.3%.

Up 34.7% already in 2021, plenty of options traders are betting on more upside for GM ahead of earnings. Over 140,000 calls have crossed the tape today, in comparison to 38,000 puts. Most popular is the weekly 2/12 60-strike call, where new positions are being opened. The March 60 call is also seeing notable action.

This penchant for calls is nothing new, though. General Motors stock's 50-day call/put volume ratio of 4.99 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), stands higher than all but 1% of readings from the past year, showing long calls being picked up at a much faster-than-usual rate in the last 10 weeks. 

Even with earnings ahead, premium is reasonably priced at the moment. GM's Schaeffer's Volatility Index (SVI) of 53% is in the 16th percentile of its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

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