Bears Circle Busy General Motors Company (GM)

It's been a busy start to 2016 for General Motors Company (GM)

by Kirra Fedyszyn

Published on Jan 5, 2016 at 10:38 AM
Updated on Jun 24, 2020 at 10:16 AM

It's been a busy start to 2016 for General Motors Company (NYSE:GM), and things won't likely slow down anytime soon. GM yesterday said it is investing $500 million in ridesharing specialist Lyft, and today announced a mapping technology partnership with Mobileye NV (NYSE:MBLY) and reported a rise in December auto sales. Looking ahead, CEO -- and now chairman of the GM board -- Mary Barra will deliver a keynote address at the Consumer Electronics Show (CES) in Las Vegas, just days before a big date in the courtroom. So, how are options traders betting on GM?

The shares of GM are down 3.2% at $32.25, on pace to end beneath their 120-day moving average for the first time since early October. GM puts are trading at twice the average intraday clip, with what could be buy-to-open action spotted at the January 2016 30-strike put. By purchasing the puts to open, the buyers expect GM to breach $30 by the close on Friday, Jan. 15, when front-month options expire.

But bearish betting is nothing new for GM. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.83 ranks higher than 84% of all readings in the past year. Echoing that, GM's Schaeffer's put/call open interest ratio (SOIR) of 0.74 is higher than 82% of the past year's readings, suggesting near-term traders are more put-heavy than usual.

And it appears this could be a good time for traders to pick up General Motors Company (NYSE:GM) options. The security's Schaeffer's Volatility Scorecard (SVS) of 80 suggests the shares have tended to make outsized moves over the past year, compared to what the options market has priced in.


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