General Motors and Ford have seen very different options activity lately
The auto sector is swimming in red ink today, for a variety of reasons. From a macro perspective, deteriorating economic conditions in China forced European automaker Mercedes to trim its annual forecast. Digging deeper, two sector stalwarts are battling internal headwinds as well.
At last check, General Motors Co (NYSE:GM) is down 0.8% to trade at $48.20, with additional headwinds coming from a 449,671 vehicle recall for an inoperative low brake fluid warning. Year-to-date, GM is 34% higher and a chip shot from its July 18 two-year high of $50.50. The shares breached $40 in early August, but support stepped up at their 200-day moving average.
Despite the solid technical foundation, puts are growing in popularity. The stock’s Schaeffer's put/call open interest ratio (SOIR) of 1.19 ranks in the 89th percentile of its annual range, showing there is an unusual put skew in the front three-months' series.
Sector peer Ford Motor Co (NYSE:F) is down a sharper 2.1% to trade at $10.70, weighed down by a recall of its own due to malfunctioning camera displays. F traded at three-year lows of $9.49 on Aug. 5, coincidentally the same day of GM's multi-month bottom. While the shares are back above double digits, there's overhead pressure looming at their 50-day moving average, which has begun to curl lower.
Options traders continue to bet bullishly, despite a 11% year-to-date deficit.. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 46,716 calls in the last week, compared to 14,242 puts. The resultant 10-day call/put volume ratio ranks in 79th percentile of its annual range, indicating that the skew is at a heightened state for 2024.